MSI: A period of pain looks increasingly likely for dry bulk owners - SAFETY4SEA - Safety4Sea

The adust bulk marketplace could beryllium acceptable for a downbeat 2023 with the symptom perchance extended into 2024, according to the latest quarterly adust bulk marketplace study from Maritime Strategies International.

Behind the falling net representation is the faster than expected unwinding of larboard delays that kept the marketplace buzzing during 2020-21, with larboard operations possibly not acold from approaching ‘normality’. While ballast and laden durations connected circumstantial commercialized flows whitethorn increase, MSI believes that immoderate affirmative twelvemonth connected twelvemonth interaction connected marketplace balances successful 2023 volition beryllium much than offset by reduced larboard delays.

MSI forecasts an betterment successful fleet ratio adjacent year, recognising that the process is improbable to beryllium linear and some COVID-19 (and the argumentation responses to it) and geopolitical and commercialized influences volition proceed to beryllium factors with the imaginable to impact fleet utilisation successful important ways.

“To enactment it 1 way, wherever Capesize markets person led towards the extremity of this year, others volition soon follow.” said Plamen Natzkoff, adust bulk expert with MSI.

We expect a cyclical downturn successful the marketplace implicit the adjacent two-three years, characterised by pronounced weakness successful bulk bearer net driven by the continuing erosion of enactment factors and tepid commercialized growth,

On balance, a antagonistic presumption for marketplace balances and net chimes with progressively bearish sentiment for the planetary economy; indeed, a much drastic downturn successful economical output remains a realistic prospect, explored done MSI’s Low Case outlook. But, for adust bulk astatine least, China inactive has imaginable to astonishment connected the upside.

In caller reports, MSI has pointed to the imaginable for a near-term steel-intensive stimulus by the Chinese government, albeit predicated connected a autumn successful vigor costs and commodity prices, and a loosening successful COVID restrictions.

Recent weeks/months person seen China taking a rising stock of cheaper vigor from Russia, whilst weaker request astir the satellite and easing proviso chains person undermined commodity prices. Finally, a caller loosening of COVID restrictions hints astatine a rising anticipation that a steel-intensive stimulus whitethorn beryllium connected the cards.

“Whilst MSI finds itself unquestionably astatine the much bearish extremity of caller adust bulk marketplace commentary from brokers, owners and different analysts, our forecast for adust bulk spot markets successful 2023 is not acold antithetic from existent FFA contracts,” adds Dr Natzkoff. “Our investigation suggests that, without the payment of a comparatively tiny orderbook, marketplace balances won’t statesman to tighten again until 2025 with the imaginable for much meaningful maturation successful net from 2026.”