The current new-building process for dry bulk ships has now dropped below the lows of 2012, and having continued downwards, is at the lowest level since 2003. This could potentially sway owners into buying new ships, feeding even more into the already oversupplied fleet and worsening the condition of the dry bulk market even further. However, thus far owners appear to have chosen not to jump on the lower prices.
Chief Shipping Analyst at BIMCO, Peter Sand, Says: “The fact that ship owners have refrained from ordering new dry bulk ships despite the low new-building prices is positive for the future dry bulk market. However, for there to be an actual shorter-term improvement in the market we would need to see a spike in demand or a substantial reduction of the fleet”.
Overall dry bulk contracting has decreased substantially in 2015 compared to in 2014, So far this year the total volume of new contracts placed at yards in one of the three big shipbuilding nations, China, South Korea and Japan, is just 11.3 million DWT, compared to 58 million DWT in 2014.
Although orders have remained remarkably low through the year, one order by Nippon Steel & Sumitomo Metal Corp. (NSSMC) stands out to account for a spike in September. NSSMC wishes to replace its Capesize fleet with larger ships ordered nine VLOCs from two yards in Japan.
China, the largest producer of dry bulk ships in recent years, has also experienced the most significant drop this year, with signed contracts decreasing from 34 million DWT in 2014 to 2.5 million DWT in 2015.
“The dry bulk market has been in a slump in 2015 mainly due to a great imbalance between supply and demand. The demand for dry bulk commodities has slowed down during the year with coal taking the biggest hit. Meanwhile on the supply side, owners have been reluctant to scrap their ships during the second half of the year at the same pace as during the first half of year, where we saw a new half-year record. This has left the fleet at a level not corresponding with the diminishing demand. The unfavourable situation has driven the demand for dry bulk ships down and ultimately the price of new-buildings has followed suit”, adds Peter Sand.
Adapted from press release by Rebecca Bowden
Read the article online at: https://www.worldcement.com/asia-pacific-rim/04122015/contracting-in-dry-bulk-remains-low-123/