This year Hong Kong’s flagship industry event, the Asian Logistics and Maritime Conference 2018 (20-21 November, Hong Kong Convention and Exhibition Centre) has brought together an impressive panel to explore the challenges and opportunities in the dry bulk market.
Together, Dr Henriette Van Niekerk, director and global head of Dry Bulk Freight Analysis, Clarksons Platou, Rahul Kapoor, senior analyst, Asia –Pacific Transportation, Bloomberg Intelligence, and John Michael Radziwell, chief executive, C Transport Maritime, will be tasked with deciding if the relative upturn in dry bulk shipping fortunes are sustainable, or not. What might they predict?
Well, ahead of ALMC 2018, Clarkson Research’s autumn market overview was broadly positive. Coinciding with that report, Hong Kong’s leading minor bulk player, Pacific Basin reported an improving 3Q 2018, citing healthy demand combined with muted supply as being the main drivers behind its continuing recovery in the third quarter of 2018.
Looking at the major bulks, Clarkson Research noted that Capesize spot earnings were up 42% year-on-year during January to August, with expanding long-haul iron ore exports from Brazil, growing Australian iron ore supply and healthy expansions in coal trade driving up freight rates. Asset values have risen in tandem “with a guideline price for a 5-year old Capesize standing at US$37.25m at the end of August up from US$33m at the end of 2017.”
The Panamax fleet has also witnessed improved conditions, if more modest than those seen in the Capesize sector. Spot earnings rose 28% year-on-year from January to August, largely driven by growth in the coal trade and record Brazilian grain exports. On the downside, Chinese tariffs on US grains may impact on the country’s exports in Q4 2018.
However to get a concise and direct appraisal of the current market, one need look no further than the managing director of Clarkson Asia who has provided us with a quirky academic analogy.
“From a personal perspective I would note that the dry bulk market presently is a bit like my daughters’ half term report from her school which I received last Friday…
“To paraphrase and in summary having promised great things by this stage of proceedings what we’re seeing instead is a Bronze Award rather than a Gold Award!
“With the BDI hovering around 1600 points the potential is certainly still there for a strong performance in the balance of Q4 and a strong 2019 , things just haven’t quite ‘caught fire’ yet.
“Capes. Bobble around in the high teens to low 20s – overall a B minus.
“Panamax. Healthy demand in the Atlantic less stellar in the Pacific, a B plus.
“Supramax. The stars of the show of late – some really strong results here. Still not touching the really high notes but getting there. Grade A minus.
“Handies. Very respectable performance here too with some really quite firm period rates being paid for modern tonnage. Another A minus.
“The problem with these results is that it’s all very well to be getting As in subjects like geography and drama (eg. Handies and supras) but, if you’re not getting top grades in heavyweight subjects like Maths and Physics (Capes & Panamaxes) it drags the whole balance down…
“Still we live in hope that Q4 will still provide a respectable/strong performance and that 2019 will herald even better things, so that we can achieve that Gold distinction potential we all know is there on the inside !”
With some A+ performances expected from ALMC 2018 it’s time you booked your Logistics and Maritime class now at www.almc.hk