Maritime Strategies International (MSI Ltd) head of dry bulk freight and commodities research Dr Plamen Natzkoff gave an overview of the dry bulk freight market at the inaugural International Bulk Shipping Conference in London in November 2023
Dr Natzkoff highlighted the largely positive sentiments in the dry bulk shipping sector in early 2023, which was fuelled by the reopening of businesses in China and the promising outlook for India’s private markets. However, despite these positive expectations, the market faced significant challenges.
Freight rates, for example, dropped considerably below the levels seen in 2021 and 2022.
He said, “Freight rates across the four dry bulk sectors in 2023 were, at best average, and significantly below 2021.”
He noted several factors contributed to these challenges. Port congestion was gradually resolved, leading to an unwinding effect. Additionally, increased fleet efficiencies played a role, along with continuous fleet growth. It is anticipated similar fleet growth levels will be maintained in the coming year.
Furthermore, Chinese coal imports, driven by hydro scarcity, could potentially be reversed depending on future rainfall patterns.
Looking ahead, Dr Natzkoff’s medium-term projection suggested a structural shift towards minor mineral trades. This is complemented by a long-term trend favouring green steel production.
In spite of these challenges, Dr Natzkoff remains optimistic about trade growth in 2024. He noted there is potential for Chinese stimulus measures and incentives for coal trading.
In conclusion, he said, “On the positive side, the energy transition will not only incentivise new trade flows, but it will also require a replenishment of the (dry bulk) fleet, which requires a significant amount of scrapping.”
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