A strong minor bulk freight market in the first quarter of 2022 saw Hong Kong's Pacific Basin Shipping generate average Handysize and Supramax daily time-charter equivalent earnings of US$23,810 and US$32,510 net per day in the first quarter, representing an increase of 117% and 122% compared to the first quarter of 2021, respectively.
Pacific Basin outperformed the average Handysize (BHSI 38k dwt tonnage-adjusted) and Supramax (BSI 58k dwt) indices by US$3,260 per day and US$8,610 per day, respectively. The company's performance continues to benefit from its diverse cargo and customer base and the close customer interaction facilitated by an extensive global office network.
The minor bulk market is current characterised by spot rates for Handysize (BHSI 38k dwt tonnage-adjusted) and Supramax (BSI 58k dwt) ships averaged US$20,550 and US$23,900 net per day respectively in the first quarter of 2022, representing a 47% and 51% increase respectively compared to the same period in 2021.
Positive demand and supply fundamentals overall have helped to support rates despite normalising global growth, increasing inflation, the conflict in Ukraine, and China continuing to impose severe Covid-19 restrictions resulting in lower domestic growth and logistical inefficiencies.
Looking to the supply side Pacific Basin management concluded: Despite strong earnings and healthy balance sheets for most dry bulk owners, we expect that new ship ordering – for Handysize and Supramax ships – will remain restrained, discouraged by uncertainty about the future fuels and vessel designs and technology that will be required to meet coming decarbonisation regulations. Furthermore, shipyards are largely filled with orders for non-dry bulk ship types, which further limits scope for new ship ordering in our sector. According to Clarksons Research only 36 dry bulk vessels with a total 2.8m dwt have been ordered year to date, a reduction of 70% and 74% respectively compared to the same period in 2021.
The overall dry bulk orderbook is currently 6.6%, representing a reduction of 0.4 percentage points since the beginning of the year as deliveries have outpaced new ordering. In addition to a shrinking orderbook and lower future deliveries, we expect scrapping to increase in coming years as IMO fuel-efficiency rules will encourage owners to phase out older, less efficient ships. Net fleet growth for Handysize and Supramax is forecast to slow further in 2022 to 2.4%.
Clarksons Research's benchmark five-year old Handysize and Supramax in April values have increased 12% and 5% since December 2021 to US$28.5 million and US$29.2m respectively, supported by the firmer freight market and vessel sales activity, while benchmark Handysize and Supramax newbuilding values have increased to US$29.8m and US$33.5m respectively.
“We expect fundamental demand especially for minor bulks, grain, and coal in 2022 to remain robust, and for the dry bulk market to be further aided by higher tonne-mile demand due to changes in trade flows and global issues of food and energy security,” the company added.
Source:
Hong Kong Maritime Hub
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