Tuesday, March 17, 2009
Shippers will struggle to set sail
Tuesday, 17 March 2009
Dry-bulk shipping markets that collapsed a record 92 per cent last year will stay "depressed" because of weakening demand and oversupply, according to Drewry Shipping Consultants Ltd. The Baltic Dry Index of commodity-shipping costs dived to its lowest in more than two decades last year on slumping steel demand. Iron ore used to make the metal is the biggest single cargo hauled by dry-bulk transporters, according to Drewry. World steel output fell 24 per cent in January from the same period last year, World Steel Association data show.
The index has almost tripled this year, with gains last week driven by grain shipments from South America's eastern coast. The advance may not be sustainable, Drewry said in a monthly note issued last week.
"The current rally of freight rates is seen as a short-term recovery," Jaya Banik, an analyst at London-based Drewry wrote. "The market, in addition to the huge order book, will also have to deal with global recessionary demand. Although the worst might be over, the market is expected to remain depressed over the coming months."
The current dry-bulk fleet of 6,844 vessels, with a carrying capacity of about 421 million deadweight tonnes, will grow by 980 ships and 74.1 million deadweight tonnes this year, Drewry forecast. However, the new supply projections may be offset by older ships being broken up.
Source: Bloomberg
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