According to the latest edition of the Dry Bulk Forecaster, published by global shipping consultancy Drewry signifies that the company is maintaining a positive look with regard to the dry bulk market.
Trade war stalls charter rates
The uncertainty surrounding the dry bulk market, driven by trade wars could, nonetheless, slow down the increase in charter rates. A game of tariffs and counter- tariffs is underway with US at the centre of most of the tussles and it seems unlikely that trade wrangles will end soon.
The dry bulk market and charter rates are expected to improve from current levels, driven by moderate increases in vessel demand and low growth in vessel supply as a result of restrained new ordering and a thin order book.
Chinese exports fall
The trade wars might not have a direct negative impact on dry bulk trade as the US constitutes a small share of China’s total steel product exports and as far as Chinese soybean imports are concerned, Drewry estimates that volumes will remain unchanged. In fact, any shift of Chinese soybean imports away from US to Brazil will result in increased tonne- mile demand.
Rahul Sharan, Drewry’s lead analyst for dry bulk shipping said, “Though we expect trade wars not to have a direct negative impact on the dry bulk trade, there exists a possibility that they might adversely affect the Chinese economy. The US is China’s largest trading partner, accounting for around 18% of total Chinese merchandise exports, in terms of value. High tariffs will hurt China’s exports and impact its GDP growth, and in turn instigate a slowdown in its industrial activity, which will undermine the country’s steel consumption”.
China impacts dry bulk market
A slowdown in steel production will directly dampen iron ore and coking coal imports. Mr.Sharan added, “Since China constitutes a lion’s share of the global iron ore trade (around 70%), Capesize and VLOC charter rates will be heavily influenced by a trade war and recovery in charter rates will slow down”.
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Source: Drewry Shipping Consultants Ltd
