Executive Briefings

Dry Bulk Market Not Likely to Be Profitable Before 2017, Report Says

The gloomy outlook for the dry bulk shipping market continues to afflict shipowners, and the market is not expected to return to profitability before 2017, according to the Dry Bulk Forecaster report published by global shipping consultancy Drewry.

Dry Bulk Market Not Likely to Be Profitable Before 2017, Report Says

Ship owners continue to struggle to recover their costs as commodity demand falls far short of owners' expectations. As a result ship owners continue to downsize their vessel holdings which will enable oversupply to reduce over the next five years. The second-hand market remains active, as owners with sound financial backing have acquired many vessels in distress sales. The global dry bulk fleet grew just 2 percent in the first nine months of 2015, reaching 773 million dwt.

On the demand side, the iron ore trade is forecast to grow at a moderate pace of 3 percent to 4 percent over the next few years, coal imports to China have slowed down and a rebound is not expected any time soon. Although India does have an over-ambitious plan to become self-reliant in thermal coal, the country cannot simply lessen its dependence on imported coal, as demand continues to rise steeply.

Dry bulk freight rates are expected to improve from the fourth quarter onwards. Drewry’s view of a more stable supply-demand balance hinges largely on the expected improvement in the demand outlook and an anticipated moderate growth in the supply perspective. However, a recovery to the point that shipowners start earning profits will remain elusive for at least another year.

Drewry expects the dry bulk shipping market to return to profitability only from 2017.

Source: Drewry

Ship owners continue to struggle to recover their costs as commodity demand falls far short of owners' expectations. As a result ship owners continue to downsize their vessel holdings which will enable oversupply to reduce over the next five years. The second-hand market remains active, as owners with sound financial backing have acquired many vessels in distress sales. The global dry bulk fleet grew just 2 percent in the first nine months of 2015, reaching 773 million dwt.

On the demand side, the iron ore trade is forecast to grow at a moderate pace of 3 percent to 4 percent over the next few years, coal imports to China have slowed down and a rebound is not expected any time soon. Although India does have an over-ambitious plan to become self-reliant in thermal coal, the country cannot simply lessen its dependence on imported coal, as demand continues to rise steeply.

Dry bulk freight rates are expected to improve from the fourth quarter onwards. Drewry’s view of a more stable supply-demand balance hinges largely on the expected improvement in the demand outlook and an anticipated moderate growth in the supply perspective. However, a recovery to the point that shipowners start earning profits will remain elusive for at least another year.

Drewry expects the dry bulk shipping market to return to profitability only from 2017.

Source: Drewry

Dry Bulk Market Not Likely to Be Profitable Before 2017, Report Says