The dry bulk market is under pressure

Despite the positive long-term fundamentals, the market appears to be under pressure in the near term due to the record low order backlog in the dry bulk fleet. In its latest weekly report, shipbroker Xclusiv said: “The first week of July has ended and the dry market is still in shallow waters, adding to the concerns of many analysts and shipowners who believed this following the opening up of the Chinese economy.” a very good summer would come for dry trade and freight rates. Weak demand for iron ore as well as weaker steel markets and weaker coal trade are putting pressure on demand and this is reflected in freight rates.”

According to Xclusiv, “although the Chinese economy has not met expectations, the steel market outside of China is also weak, raising further concerns about the development of the dry bulk market.” Additionally, in April 2023, the EU approved a plan to levy a tax on imports of High-carbon emitting goods from 2026, which could hurt India’s exports of steel, iron ore and cement to EU countries. But in business and commerce, it’s never just black or white. Many Chinese economists and analysts believe the central government would eventually allow more monetary easing to stimulate the economy. At its meeting in July, the Chinese Politburo is expected to announce further stimulus packages to ensure sustained economic growth. This stimulus package is expected to be mainly associated with industries such as green energy, digital economy and high-end manufacturing, which consume less bulk commodities than real estate and real estate sectors, but the revival and growth of China’s economy even if they starting from these sectors will eventually boost more ‘traditional’ industries such as infrastructure, real estate and construction. Apart from that, Brazil’s iron ore exports are about 4% higher in the first half of 2023 than in the same period of 2022. Brazil is poised to play a bigger role as an iron ore exporter by making operational improvements and investing in the relevant infrastructure to increase iron ore production and export capacity , if demand requires it.”

Meanwhile, “The Capesize 5TC is up about 7% from the first few days of January at $12,625/day and about 462% above the February low of $2,246/day.” For smaller vessels, the Panamax 5TC is at $8,852 and the Supramax 10TC is at $7,959 USD/day, down 31% and 25% year-to-date respectively. Handysize vessels are among those hit hardest in 2023, as their 7TC price is now at $7,627/day, which is 31% lower year-to-date and 2% lower than February lows – at a time when all other vessels’ tariffs have recovered from February’s lows. Capesize rates have managed to hold and fall less in 2023 as iron ore exports, and particularly those from Brazil, have proven to be a reliable mainstay,” Xclusiv said.

The shipbroker concluded that “when analyzing the used prices of Capesize, Panamax, Supramax and Handysize, we observe a significant increase in some categories, while other segments are either at the same level or slightly below depending on the age group since the beginning of 2023. ‘ and the size of the vessels. In the capesize segment in particular, there has been an upward trend in used prices, with a 5-year-old being worth around $50 million, which is almost 14% more than prices from early January 2023. Additionally, a 10-year-old Capesize was valued at $30.5 million as of June 30, 2023, up 5% year-to-date, while a 15-year-old vessel in the same sector is worth approximately $19 million almost at the same price level as in January 2023. On a scale down, the Panamax sector saw an increase in younger vessels, with a 5-year-old Kamsarmax vessel priced at $31.5m, an increase of around 5M corresponds to %YTD, while 10-Year Kamsarmax and 15-Year Panamax are down slightly year-to-date (4% and 2nd at $21.5M and $14.5M respectively). % decrease). The 5-year and 10-year Supramaxes were also seen up about 4% and 5%, respectively, with the former being valued at $26 million at the end of June 2023 and the latter being worth $19.5 million. The 15-year-old Supramax is down nearly 8% year-to-date and is now at $13.5 million. Year-to-date prices for 5-year-old, 10-year-old, and 15-year-old cellphones are also up about 2%, 3%, and 5%, respectively, to stand at $25 million, $17 million, and $17 million11, respectively mills accordingly. “It is evident that younger and more environmentally friendly ships have managed to hold their own in terms of assets, while on the other hand older and more energy-intensive ships are not at the forefront and their values ​​have been declining since early 2023,”

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