World News
BIMCO: Fundamentals of Supply and Demand Cannot Be Ignored If Dry Bulk Market Is to Improve
BIMCO says that if the dry bulk market is to improve, then the fundamentals of supply and demand, including larger volumes being moved, longer sailing distances, or a slowed increase in dry bulk fleet size, need to be realised first.
"The shipping market and underlying profitability can only improve if the fundamental conditions (supply and demand) also improve," stated BIMCO.
"When traditional demand growth is not increasing, we need to look harder for future growth.”
For the September to November period, BIMCO says it expects newbuilds being introduced into the global fleet to remain “subdued,” while sluggish demand is predicted to “somewhat reverse” moving into the end of the year.
Coal and iron ore, large dry bulk market drivers, are both expected to see an increase in demand over the next few months, says BIMCO, thereby “enhancing owners’ and operators’ opportunities to find employment for their ships.”
“Calculations done by BIMCO show that monthly imports into China could be 20 metric tonnes higher per month (+26 percent).
“A total of an extra 240 million tonnes on an annual basis could bring deployment for around 155 Capesizes, assuming an unchanged distribution between Australian and Brazilian imports (75 percent/25 percent),” added the shipping association.
As a result of low prices, a large supply of high-iron-content ore within global markets “may finally bring around a sizeable substitution” for Chinese steel mill consumption, explains away from the domestically produced low-iron-content ore, in favour of imports,” stated BIMCO.
"Altogether this should support the freight rates although no large-scale improvement to the fundamental balance is likely to develop."
In July, BIMCO asserted that despite a record start to the year for dry bulk demolitions, market conditions should improve enough for 2015 to fall short of being a record year as a whole.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 510.00 | 2.50 | 611.00 | 4.00 |
| Rotterdam | 477.00 | 1.00 | 618.50 | 4.00 |
| Houston | 469.50 | 0.50 | 610.00 | 2.00 |
| Fujairah | 501.50 | 1.50 | 708.50 | 3.50 |
| Global 20 Ports Average | 532.00 | 2.00 | 711.50 | 0.00 |
| Global 4 Ports Average | 489.50 | 0.50 | 637.00 | 0.50 |
| Global Average Bunker Price | 571.00 | 1.00 | 759.00 | 0.50 |
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