Interview: Trials and Tribulations of the Dry Bulk Market

first_imgThe dry bulk shipping market has been hit hard by the downturn of the Baltic Dry Index (BDI) that fell to unprecedented lows this year. Vessel oversupply and dwindling demand, especially from the world’s top importer China, have caused numerous headaches for the ship owners across the board, some of them even forced to seek bankruptcy protection.Interested in what could be the way forward for the market based on the current development, World Maritime News spoke with Mr Rahul Sharan, an analyst specializing in dry bulk shipping market at shipping consultancy firm Drewry.WMN: Would you say that the worst has passed for the dry bulk shipping market?Sharan: “This is a bit tricky. One thing is for sure, owners cannot survive for long on such low earnings. Increasing demolition – and demolition of young vessels – says it all. Supply is expected to grow at its slowest pace in 10 years. So, a lot will depend on demand this year. To sum it up – this might be the worst time for Dry bulk owners, and we do not expect any recovery before 2016.”WMN: Various market forecasts predicted a recovery of rates in the second quarter of 2015. Are there any signs of that? If so, could you elaborate on that?Sharan: “With a precarious demand outlook and a heavily lopsided oversupply, any recovery before 2016 is highly unexpected. Drewry does not expect any recovery this year – rates might increase in the second half of 2015, but a slight increase, which will not be enough to break even, cannot be termed as a recovery, can it?”WMN: What sector within the dry bulk shipping market has seen the highest and lowest rates in the first quarter of 2015? What are the expectations for average rates in the following period?Sharan: “Though the entire dry bulk market has seen a substantial fall in the earnings in 1Q15, the bigger vessels –especially Capesizes – have seen the biggest fall (35%) from the previous quarter and a fall of more than 40% from the same quarter last year.  The Handysize market saw the smallest drop (10%) from the previous quarter, largely because of its more versatile trade and because of its larger backhaul cargo reach.”At least 30% more supply than requiredWMN: What sector could push the market forward?Sharan: “More than two-thirds of the entire dry bulk market is based on iron ore and coal trade. The present sluggishness in the market is because of the slow growth of iron ore trade and an even slower outlook for coal trade. I think a push in the iron ore and coal trade has the potential to reinvigorate the dry bulk market.In the long run, African mineral exploration has a greater potential to give some impetus to the dry bulk trade, which will help total tonne-miles to grow faster than overall seaborne commodity trade.” WMN: How would you describe the current supply-demand balance in the sector, bearing in mind the recent trend of scrapping older vessels and subdued newbuilding orders?Sharan: “At present, there is at least 30% more supply than required. The recent trend of high scrapping and subdued ordering is helping to shrink the oversupply, but the questions remain:1) How long is it going to continue? With an increase in rates, owners might stop scrapping and start ordering2) The rate at which the oversupply is contracting is very slow. It will take years before a more respectable supply-demand balance is achieved.”WMN: We have seen owners switch from bulker newbuilding orders to conversion to tankers, what could be the impact of this trend should it continue?Sharan: “Should the bad market continue, conversions are here to stay. Vessels which are scheduled to get delivered this year and the keels are laid out are difficult to get converted. However, those vessels which are scheduled to get delivered in 2016 or later are fit candidates for conversions. If this continues, the chance of recovery in 2016 becomes stronger.”WMN: Modern, energy-efficient vessels are entering the scene. Can we expect higher demand for these vessels any time soon?Sharan: “Yes, we are already seeing a higher demand for modern vessels. We did a similar analysis in our Dry Bulk Forecaster 1Q15 for Capesize vessels and found that almost 90% of the available fixtures were for modern vessels. Pollution norms, better fuel efficiency and cheaper rates are attracting more modern vessels than older ones. “WMN: What are your predictions in case the glut continues throughout the year? How will the shipowners respond, and are we to witness more bankruptcies?Sharan: “We predict some improvement in the rates later this year. However, these improvements are not going to be good enough for operators to break even. We have already seen many owners going bankrupt over the past couple of years. Sustained low earnings, especially for cash-strapped owners, might force more of them to file for bankruptcy.”WMN: You estimated that the dry bulk shipping trade volumes increased by 8.3% in 2014. Are there any indicators pointing that the rise is continuing in 2015?Sharan: “No, there is a substantial softening in trade volumes in 2015. We expect trade volume growth to be below 4% this year – largely on account of low iron ore and coal trade to China and a low coal trade growth to India.”WMN: How much of an increase in volumes is needed to counteract the vessel oversupply?Sharan: “This could not be done in a year. As already stated above, there is an oversupply to the tune of 30%. And more than fleet growth it is vessel speed that will affect supply over the next couple of years. An increase in speed will directly increase supply. It is difficult to make an estimate, but sustained low supply growth and buoyant demand are the key factors in improving rates.”WMN: What could help the dry bulk shipping sector rebound?Sharan: “Sustained control of supply growth (which is already happening) and sustained growth in demand would help. Stubbornly low iron ore prices are testing Chinese miners’ resolve to remain active – sustained low prices might force many of them to shut down and help create some much-needed import demand. On the other hand, a surge in infrastructure development in Africa will help boost tonne-mile demand. Mozambique has yet not become a major force in coal exports as was expected, as the country’s two main ports, Nacala and Maputo, are not yet developed to handle large volumes and similarly, inland logistics need to get updated.” WMN: Indian coal imports have been seen as a sign of hope for bulk shipping as China’s imports reduced considerably. Are these estimates correct?Sharan: “Indian coal imports are expected to continue supporting the dry bulk market. India’s coal imports have risen by 20-25% annually over past 10 years. However, the Indian government has already re-allocated many coal blocks to end-users and the government is planning to increase efficiency in coal mining to make India self-sufficient. But, given the huge demand for energy in the country, a good pace of 7-8% growth in coal imports is expected.”Indian coal imports are expected to continue supporting the dry bulk marketWMN: What other emerging markets are expected to keep demand flowing?Sharan: “India cannot feed the coking coal demand of its steel industry, which is growing at a fast pace. We expect an increase of more than 8% in coking imports to the country, helping demand for Panamax and Supramax vessels.South Korea’s appetite for iron ore is growing at a good pace. Iron ore imports to Korea increased by 16% in 2014; further growth of 4-5% a year is expected in the next four or five years.Another area for growth would be minor bulk trade. With Indonesia restricting its exports of unprocessed minerals, China is trying to source them from farther locations. The Ebola break-out in Western Africa restricted any shipping activity in the region last year. With the outbreak under control, trade to and from Africa might help the dry bulk trade.”World Maritime News Staff; Images: Dianalast_img read more

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Nova Scotia The Winter Shopping Destination

first_img When dazzling Christmas trees are illuminated in communitiesacross the province, they signal a time when Nova Scotians andvisitors head out to shops and markets. Whether you’re lookingfor a gift for that special someone, a unique item to treatyourself, or you’re just window shopping, there’s guaranteed tobe something to tempt you. From the novice shopper to the dedicated expert, there’s ashopping experience to meet everyone’s need. Browse throughhistoric shopping districts in Halifax’s Hydrostone area, inAnnapolis Royal, Sydney and Lunenburg. Peruse antique shops inthe highlands of Cape Breton and Pubnico. Spend a day in thelargest malls east of Montreal. Or visit century old farmers’markets and regional craft fairs. Nova Scotia has an international reputation for its handmadegoods, fine wines, and products from the sea. Many Nova Scotiastores also offer clothing and other products found in biggercentres like Toronto, Montreal and New York. On a shopping tourof Nova Scotia, you can find everything you’re looking for, andeven a few surprises you hadn’t planned on. In Mahone Bay you’ll find the finest handmade Belgian chocolates,while across the province in Pictou, you’ll find the highestquality kitchen knives in the world. In Halifax, you’ll find thelatest fashion trends straight from the runways of Paris and NewYork. If a more relaxed atmosphere is what you’re looking for, head toCape Breton where you’ll find stores filled with the perfect NovaScotia gift items including music and one-of-a kind crafts.Antique dealers in shops from Yarmouth to Sydney will tempt youwith their knack for finding those special items not foundanywhere else. Whether it’s the 2003 limited edition Christmas ornament, or thatspecial bottle of wine, you’ll quickly realize that Nova Scotiacraftspeople accept only the best of quality and character intheir work. Shopping makes an ideal excuse for a weekend getaway in NovaScotia. Many hotels and bed and breakfasts offer special packagesto make your shopping weekend that much more special. Whetheryou’re from the Maritimes, New England, or from right here athome, our shopkeepers will welcome you with genuine Nova Scotiahospitality. This year, the potential for a weekend shopping getaway in theprovince is even better. As always, many bookshops and smallerstores are open seven days a week. However, this year, many ofthe larger Nova Scotia stores will also open on Sundays duringthe weeks leading up to Christmas. For further information on winter shopping, events, festivals andattractions, see the Tourism and Culture website atwww.novascotia.com or call 1-800-565-0000. -30- NOTE TO EDITORS: Following is one in a series of feature articlesfrom Tourism and Culture.last_img read more

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