Wet And Dry Market Make Assessment Difficult



The shipping data is available in many different ways these days. But, the actual “operational fleet” statistics at any given time still eludes accurate assessment. WBTS regulations bind the ship owners and so they rush to complete their fleet’s dry dockings before the end of the grace period. But, dry bulk owners prefer to postpone for next year since the majority of bulkers is not restricted by US trading regulations.

So, the statistics failed to quantify the importance and net effect that the rush of owners has had on the actual number of vessels looking for cargoes. Only after mid-Dec 2015 any VLCC docking can be assessed.

As long as accurate information on vessels concurrently at shipyards passing SS, DD or simply undergoing minor repairs is known, the influence this has on rates for the wet market and the dry market cannot be made. Projected earnings (p/e ratio) could also be another indicator but as shipping markets are highly volatile such ratio analysis becomes highly irrelevant unless processed in real terms (i.e. non-inflation adjusted prices/earnings) during a longer period.

With rates spiking recently – especially on the VLCC’s where we experienced post 2008 highs- and values remaining significantly unaltered in recognition of the substantial order book to fleet ratio, it is no surprise that the p/e ratio on most sizes has dropped below its 10-year historical levels.

Analysts are finding it difficult to predict whether the prices will move up or the earnings.

Meanwhile, the demolition front has taken another turn for the worse last week, with prices across the board moving downwards and further weighing down on both activity and sentiment. Chinese bids at levels even lower than the ones before the artificial spike. The cheap Chinese scrap steel imports are still crippling the Indian subcontinent market, affecting the breakers’ margins until the end of the year. The big dry bulk vessels are sent for scrap. It is a trend that is slowly reviving again and is probably one of the few “positives” in the market right now. But, ultimately the freight market performance alone will decide the fate and not demo prices.

Prices this week for wet tonnage were at around 145-330 $/ldt and dry units received about 125-300 $/ldt.



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