Executive Briefings

Dry Bulk Market Shows Improvement After Record Lows

Bulker operators are seeing solid improvements after the record low day rates reached earlier this year: the Baltic Dry Index stood at nearly 1,200 early this month, a fourfold increase over the levels reached in February 2016.

Dry Bulk Market Shows Improvement After Record Lows

The Panamax segment has recovered especially well, reaching an average spot rate of nearly $12,500 early this month. The rate was approximately the same for a much larger Capesize.

Insiders say that the improvements are driven by recovering Chinese demand for commodities, falling newbuilding activity and increased scrapping.

“The market is fundamentally improving and barring a severe disruption to the world economy, it should be plain sailing from the second quarter [of 2017] onwards," said Scorpio Bulkers president Robert Bugbee, speaking to the Wall Street Journal.

Even as rates have recovered, operating costs have declined, say analysts with Drewry — at least for now. For 2016, operating costs went down by an average of 4.4 percent across all vessel categories — in addition to a reduction of 1.5 percent in 2015.

However, Drewry editor Nikhil Jain predicts that costs will rise again next year.

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The Panamax segment has recovered especially well, reaching an average spot rate of nearly $12,500 early this month. The rate was approximately the same for a much larger Capesize.

Insiders say that the improvements are driven by recovering Chinese demand for commodities, falling newbuilding activity and increased scrapping.

“The market is fundamentally improving and barring a severe disruption to the world economy, it should be plain sailing from the second quarter [of 2017] onwards," said Scorpio Bulkers president Robert Bugbee, speaking to the Wall Street Journal.

Even as rates have recovered, operating costs have declined, say analysts with Drewry — at least for now. For 2016, operating costs went down by an average of 4.4 percent across all vessel categories — in addition to a reduction of 1.5 percent in 2015.

However, Drewry editor Nikhil Jain predicts that costs will rise again next year.

Read Full Article

Dry Bulk Market Shows Improvement After Record Lows