The dry bulk market has been steadily rising from its own “ashes” over the course of the past couple of months. However, things will need to keep improving steadily until the end of the year, in order for the market’s prospects to brighten up, starting from 2017 onwards, provided, of course, global trade growth remains at today’s level, despite the apparent weakness. According to its latest weekly report, shipbroker Intermodal noted that as we leave the first quarter behind, evidence suggests that there are increasing chances that 2016 won’t be a better than 2015 year from a macroeconomic point of view, with projections for global growth once again being revised downwards.

According to Intermodal’s Research Analyst, Vassilis Logothetis, “the latest estimate by the International Monetary Fund in April projects a modest 3.2% global growth for this year, 0.2% down from the January projection and just 0.1% higher that the estimated global growth for 2015. Once again the biggest part of this year’s world growth will come from the emerging economies, although they are not expected to grow at a much faster pace than they did in the year before with the economic slowdown in China and the weak growth both in oil and non-oil commodity exporters having their effect on the final projection estimates. Moreover, the presence of several additional risks like further incidents of financial turbulence or a larger than anticipated adverse effect of lower oil prices on oil exporting countries and various other geopolitical risks including a possible Brexit, increase uncertainty over future economic developments and may lead to the realization of even weaker growth scenarios before the world economy picks up at a projected 3.5% growth in 2017”, said Mr. Logothetis.

He went on to note that “with regards to global trade, which is of prime importance to the shipping industry, the latest evidence provided by the OECD suggests that its growth rate for 2016 will be weak along the projections for global growth. Overall things in the global economy draw a not very promising picture for the Dry Bulk sector in 2016 and despite the fact that during the last couple weeks we have moved away from the historically low levels we witnessed during the last part of 2105 and the first months of this year, things in the sector remain shaky as falling demand and weak growth prospects occur on the back of excess tonnage supply. Given that things continue to steadily improve, 2017 is expected to be a much better year for the sector and the shipping industry overall. Saying that, we should all be patient and cautious as we have just left q1 and three more quarters are on their way before this year concludes”, Logothetis concluded”.

Intermodal noted that over the course of the past week, the dry bulk market kept on strengthening, on the back of improved psychology. At the same time, “despite the fact that activity in the SnP market slowed down a bit, buying interest remains firm overall, with Greek owners being very active in the Dry Bulk sector. On the tanker side, we had the en-bloc sale of the “SN CLAUDIA” (109,266dwt-blt 09, China) and the “SN OLIVIA” (109,005dwt-blt 10, China) which were sold to Italian buyers, for a price in the region of $65.0m. On the dry bulker side, we had the sale of the “NORDRHINE” (75,080dwt-blt 01, S. Korea) which was reported being sold to Greek buyers for a price in the region of $3.90m”, the shipbroker said.

Meanwhile, “as the newbuilding market remains in search of silver linings, prices and ordering interest are still exceptionally soft, with the majority of any activity reported nowadays concerning less conventional sectors. Dry bulk orders unsurprisingly remain few and far between, while even when these do pop up, they hardly signal a positive turnaround in shipbuilding activity. As a matter of fact orders like the one placed by ICBC, which was recently confirmed, actually manage to have the opposite effect. Right when the Capesize market has finally started showing some signs of life, following a long time of well below OPEX earnings, additional VLOC orders come to stress the troubles that the segment is facing and will continue to face in the future. As more tonnage dedicated to this trade is being ordered so as to service specific contracts that would otherwise offer business to existing vessels, this means that the structural issues that Capesize business is dealing with, will keep things challenging for the segment and – consequently- make the Capesize newbuilding story harder to “sell” for much longer. In terms of recently reported deals, Rederij Doeksen placed an order for two firm PoPaxes (600pax) at Strategic Marine, in Vietnam for a price in the region of $ 25.0m and delivery set in 2018”, Intermodal concluded.