SHIPPING MARKET OUTLOOK Bulkcarrier Supply ease back to 16m dwt in 2014 and 10m dwt in 2015.As such,with demolition running at On the supply side,the dry bulk fleet continues around 4m dwt a year,the fleet growth rate is to grow,but the pace of expansion is slowing: set to slow significantly rapid growth of 17%was recorded in 2010; declining to 15%in 2011;10%in 2012;and a The Handymax Market (40-65,000 dwt) much reduced 6%in 2013.But the cumulative effect was that by the end of 2013 the dry bulk This category includes the Supramax bulk fleet was 723m dwt,34%higher than at the end carriers and at the start of March 2014 the fleet icensed to Shanghal L12603 of 2010 (see Table 1.3).Meanwhile,in total, was 3,007 ships of 158.9m dwt.This segment dry bulk trade grew 20%,so the gap between has the biggest orderbook,24.4%of the fleet- supply and demand has widened by an 658 vessels of 38.8m dwt-and is growing at a unhealthy 14%. rate of about 8%a year,likely to be higher than the growth rates of the trade in minor bulks The Capesize Market (over 100,000 dwt) discussed in the previous section.Deliveries in Maritime University 2013 were 14.3m dwt,and a similar amount is On 1st March 2014 the Capesize fleet was set to hit the water in 2014.So still quite a bit 1,576 vessels of 295.6m dwt,2.1%more than in of pressure here. September 2013,representing a more manageable growth trend than previously.The The Handysize Market(10-40,000 dwt) orderbook,however,has increased 47%to 337 ships of 65m dwt on 1st March 2014.We This fleet,which has been stagnating for some Distribution is restricted; expect deliveries of 18m dwt in 2014,and years,is still slightly bigger (in numerical roughly the same in 2015,well down from the terms)than the Handymax fleet,with 3,077 40m+dwt being delivered a couple of years ships,of 87m dwt at the beginning of March plea ago.Demolition is also keeping the Capesize 2014.But of course the ships are smaller.The fleet under control,with 8.2m dwt scrapped in orderbook is equivalent to 16.7%of the fleet.In 2013.This is slightly less than the 11m dwt 2013,6.1m dwt was delivered,and much the scrapped in 2012,but it made a dent in the 22m same is expected in each of the next two years. remember to dwt deliveries,reducing fleet growth to only Against this background,demolition is also 14m dwt.So,market forces are at work, running at around 6m dwt a year,so the fleet reducing the growth of supply,whilst helping to will not grow much. modernise the fleet.We expect the Capesize acknowledge fleet to pass 300m dwt in mid-2014,and end the The Bulkcarrier Market Outlook year at 304m dwt,up 3.8%.With iron ore trade growth set to surpass this,the demand supply Bulker earnings have increased over the last six the sourde. balance in the Capesize sector looks likely to months,but from a weak base.Capesizes and improve. Supramaxes did quite well,but the old favourite of shipping investors,the Panamax bulker,is The Panamax Market(65-100,000 dwt) getting squeezed between Capes and the http://ww. Supramaxes.Despite the improved earnings, On Ist March 2014 the Panamax bulk carrier there is still a sizeable gap between supply and fleet was 2,386 ships of 188.1m dwt,3.6% demand.Unlike in previous downturns,the higher than six months ago and 40%bigger majority of this surplus has gone into slow than at the beginning of 2010.The orderbook is steaming.This makes short-term market spikes now 431 vessels of 34.7m dwt,slightly down possible,but the bulker fleet retains the capacity from six months ago,when there were 455 to speed up to take advantage of higher rates. Panamaxes on order.20m dwt of Panamaxes This is new territory for the bulk carrier owners were delivered in full year 2013,and were and for analysts trying to predict the future of scrapped 4.4m dwt scrapped,meaning that the the market.So the bottom line is that although .2218303:54:80410299051ci fleet continues to grow at about 15m dwt a year. we're past the trough,"don't get too excited However looking ahead,according to the yet";in the sector as whole some level of current projections,deliveries are expected to caution should remain. Clarkson Research Services 18 Spring 2014Clarkson Research Services 18 Spring 2014 SHIPPING MARKET OUTLOOK Bulkcarrier Supply On the supply side, the dry bulk fleet continues to grow, but the pace of expansion is slowing: rapid growth of 17% was recorded in 2010; declining to 15% in 2011; 10% in 2012; and a much reduced 6% in 2013. But the cumulative effect was that by the end of 2013 the dry bulk fleet was 723m dwt, 34% higher than at the end of 2010 (see Table 1.3). Meanwhile, in total, dry bulk trade grew 20%, so the gap between supply and demand has widened by an unhealthy 14%. The Capesize Market (over 100,000 dwt) On 1st March 2014 the Capesize fleet was 1,576 vessels of 295.6m dwt, 2.1% more than in September 2013, representing a more manageable growth trend than previously. The orderbook, however, has increased 47% to 337 ships of 65m dwt on 1st March 2014. We expect deliveries of 18m dwt in 2014, and roughly the same in 2015, well down from the 40m+ dwt being delivered a couple of years ago. Demolition is also keeping the Capesize fleet under control, with 8.2m dwt scrapped in 2013. This is slightly less than the 11m dwt scrapped in 2012, but it made a dent in the 22m dwt deliveries, reducing fleet growth to only 14m dwt. So, market forces are at work, reducing the growth of supply, whilst helping to modernise the fleet. We expect the Capesize fleet to pass 300m dwt in mid-2014, and end the year at 304m dwt, up 3.8%. With iron ore trade growth set to surpass this, the demand supply balance in the Capesize sector looks likely to improve. The Panamax Market (65-100,000 dwt) On 1st March 2014 the Panamax bulk carrier fleet was 2,386 ships of 188.1m dwt, 3.6% higher than six months ago and 40% bigger than at the beginning of 2010. The orderbook is now 431 vessels of 34.7m dwt, slightly down from six months ago, when there were 455 Panamaxes on order. 20m dwt of Panamaxes were delivered in full year 2013, and were scrapped 4.4m dwt scrapped, meaning that the fleet continues to grow at about 15m dwt a year. However looking ahead, according to the current projections, deliveries are expected to ease back to 16m dwt in 2014 and 10m dwt in 2015. As such, with demolition running at around 4m dwt a year, the fleet growth rate is set to slow significantly. The Handymax Market (40-65,000 dwt) This category includes the Supramax bulk carriers and at the start of March 2014 the fleet was 3,007 ships of 158.9m dwt. This segment has the biggest orderbook, 24.4% of the fleet - 658 vessels of 38.8m dwt - and is growing at a rate of about 8% a year, likely to be higher than the growth rates of the trade in minor bulks discussed in the previous section. Deliveries in 2013 were 14.3m dwt, and a similar amount is set to hit the water in 2014. So still quite a bit of pressure here. The Handysize Market (10-40,000 dwt) This fleet, which has been stagnating for some years, is still slightly bigger (in numerical terms) than the Handymax fleet, with 3,077 ships, of 87m dwt at the beginning of March 2014. But of course the ships are smaller. The orderbook is equivalent to 16.7% of the fleet. In 2013, 6.1m dwt was delivered, and much the same is expected in each of the next two years. Against this background, demolition is also running at around 6m dwt a year, so the fleet will not grow much. The Bulkcarrier Market Outlook Bulker earnings have increased over the last six months, but from a weak base. Capesizes and Supramaxes did quite well, but the old favourite of shipping investors, the Panamax bulker, is getting squeezed between Capes and the Supramaxes. Despite the improved earnings, there is still a sizeable gap between supply and demand. Unlike in previous downturns, the majority of this surplus has gone into slow steaming. This makes short-term market spikes possible, but the bulker fleet retains the capacity to speed up to take advantage of higher rates. This is new territory for the bulk carrier owners and for analysts trying to predict the future of the market. So the bottom line is that although we’re past the trough, “don't get too excited yet”; in the sector as whole some level of caution should remain. Licensed to Shanghai Maritime University. Distribution is restricted; please remember to acknowledge the source. http://www.clarksons.net 15/09/2014 08:45:39 36122 Licensed to Shanghai Maritime University. Distribution is restricted; please remember to acknowledge the source. http://www.clarksons.net 15/09/2014 08:45:39 36122