*Trends in the dry bulk market
International study revealed that the dominant factors for the dry bulk market are commodity supply industries like energy, manufacturing and construction. As the experts have discussed in various studies, world trading activity is closely correlated to worldwide GDP levels. In the past, the economies of the US, Europe and Japan have acted as the main drivers of the dry bulk trade market. However, the contributions of China, India and Brazil are becoming more significant as these countries’ GDP growth rates are considerably higher than those of the developed countries. China is by far the largest contributor, and has been so for the past 5-year.
Despite this, time charter rates in the whole market are considerably down since the 2003- 2008 period. The continuous supply of new ships throughout 2012 and 2013 because of the large order book is a significant contributor to the prolonged deflated market, and the outlook towards 2020 remains challenging. Australia and Brazil are the world’s largest iron ore exporters and China is by far the largest buyer. This pattern is predicted to continue as worldwide steel demand is set to raise considerably as experts approach 2020 and beyond.
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Furthermore, the study also revealed that China has surpassed Japan as the world’s largest importer of coal. Analysts believe that the high volume of imports will remain strong and that a rise in coal demand will give the bulk fleet a boost. Moreover, it is predicted that India’s iron ore exports will decline in order to protect national steel production. This suggests that China will need to source vessels from more distant parts of the world. India will, however, need to import large amounts of coal in the coming years because of the investments made in numerous large power projects. All in all, it is predicted that the trade between Africa-Asia and the Middle East-Asia will keep growing at a higher pace than the rest of the world as experts’ approach 2020, and this will have an optimistic effect on the dry bulk market. The composition of the dry bulk fleet in 2020 is predicted to be influenced by the factors described above. With respect to both supply and demand, experts will see stronger growth below 100 thousand dwt and above 200 thousand dwt.
All in all, analysts believe that the dry bulk fleet is predicted to increase by less than 5 percent per year up to 2020. Vessel values and earnings will continue to be under pressure for years to come as a consequence of the current oversupply.