Drewry presented a positive outlook on the dry bulk market, as it expects charter rates to improve, driven by moderate increases in vessel demand and low growth in vessel supply. This is caused by restrained new ordering and a thin orderbook, according to Drewry’s latest edition of the Dry Bulk Forecaster.
Nevertheless, the uncertainty around the dry bulk market due to the trade war, slowed down the increase in charter rates. As Drewry said the trade war is unlikely to end soon.
[smlsubform prepend=”GET THE SAFETY4SEA IN YOUR INBOX!” showname=false emailtxt=”” emailholder=”Enter your email address” showsubmit=true submittxt=”Submit” jsthanks=false thankyou=”Thank you for subscribing to our mailing list”]
However, trade wars might not have a direct negative impact on dry bulk trade. The US is a small share of China’s total steel product exports and as far as Chinese soybean imports are concerned, Drewry estimates that volumes will not change. In fact, any shift of Chinese soybean imports away from US to Brazil will increase tonne-mile demand.
Rahul Sharan, Drewry’s lead analyst for dry bulk shipping commented that despite the fact that the trade war will not have a negative impact on the dry bulk trade, it is possible that it might affect the Chinese economy.
Namely, high tariffs will damage China’s exports and impact its GDP growth, and in turn start a slowdown in its industrial activity, which will undermine the country’s steel consumption.
In addition, a reduction in steel production will impact iron ore and coking coal imports. Specifically, since China is leading the global iron ore trade (around 70%), Capesize and VLOC charter rates will be influenced by a trade war and recovery in charter rates will slow down, Mr. Sharan concluded.
