Bullish estimates for the dry cargo freight market

The bulk cargo freight market has fallen to its lowest point in recent months, but analysts remain optimistic about the course of fares in 2022, based on the fundamentals of the industry.

In particular, the key index of the freight market, Baltic Dry Index fell yesterday to 2,229 points, which is the lowest level since April 14. “Fares are falling further in anticipation of the holidays,” said a note from Intermodal.

The average daily fare for large capesize ships in the spot is $ 20,363 and for smaller panamaxes $ 21,460.

Iron ore futures in Dalian and Singapore receded as concerns about coronavirus restrictions in China and the “off-season” approach to construction in Asia, the world’s largest steelmaker, plummeted.

Production from China is expected to slow due to Chinese New Year and the Beijing Winter Olympics next February.

Strong fundamental

However, analysts and shipowners are making positive predictions in the long run, as China will return to the forefront after February. After all, as the market fares point out, they managed to remain at satisfactory levels, despite the absence of the Asian country.

A factor of optimism for the coming years is the low order book. Uncertainty about the “green” ships of the future limits the investment interest of shipowners, which reduces the tonnage offered.

At the same time, environmental regulations starting in 2023 are expected to reduce the fleet’s cruising speed, making many of the older ships unsustainable, leading many to be scrapped.

In the field of demand, optimistic assessments are expressed for dry cargo. In the presentation of Navios Maritime Holdings (interests of Angeliki Frangou) for the nine-month results, it is noted that the marine iron ore trade is expected to increase by 1.9% in 2022 and the Brazilian exports of the goods by 5.3%.

Growth of 2% is also expected to be recorded in the marine trade for coal. Asian coal imports are expected to increase by 1.6% next year.