Salient to Investors:
Shipping analysts are increasingly bearish on the outlook for rates to haul iron ore and coal as China grows at the slowest pace in three years at a time of record fleet expansion.
Analysts estimate Capesizes will earn the lowest day rate in at least 14 years, and down 85 percent this year. The fleet is expected to expand 13 percent this year, though the bulk may have passed because growth was as high as 25 percent in the 12 months to February 2011, the strongest since 1982, while outstanding orders are at 21 percent, down from 43 percent of existing capacity back then.
Rahul Kapoor at RS Platou Markets said fleet growth has been huge and above most people’s expectations.
Analysts predict 10 of the 14 members of the Bloomberg Pure Play Dry Bulk Shipping Index will report losses or lower profits this year.
Ole Stenhagen at SEB Enskilda Companies said companies need daily rates in the “high 20s” to break even when financing is taken into account, though the $11,709 predicted in the Bloomberg survey exceeds the $8,000 to $9,000 that owners need to cover operating costs.
Jeffrey Landsberg at Commodore Research said the sheer level of vessel oversupply is just too big, so maybe the demand-side expectations were unreasonable.