Shipping Market Review and Forecasts
While Covid-19 has had major impacts across the shipping industry, some sectors have been further affected like car carriers (Ro-Ro), with trade falling more than 60% y-o-y. As previously written (Nov. article) we ‘re past the negative peak, and although uncertainty remains, the world community expects significant improvement for 2021 and 2022.
OECD projects global GDP to rise by around 4.2% in 2021 and by an additional 3.7% in 2022, helped by COVID-19 vaccine rollouts and accommodative fiscal and monetary policies. The recovery will be led by China, which is forecast to grow by 8% next year, accounting for over one-third of world economic growth:
Shipyards are hungry for business and the best way to attract attention, is via competitive pricing. A combination of historically low prices and moving closer to beating Covid-19 may be behind a pick-up in ordering.
There are companies moving on newbuildings but these seem to be mainly the large players (state related, financial investors and the wealthiest elite shipowners). Most shipowners outside this club, would rather look for secondhand purchases given less access to cash and bank loans. Also, good deals are more probable to be found in the existing fleet, rather than in the future deliveries. Interesting bargain may be the resales, vessels that were ordered and built before, but were cancelled during covid-19. These stock ships at the yards, wait to be delivered to their new owners.
BDI is fluctuating at around 1.200 units, with Handys improving fixing at nearly $12k/d compared to Capes and Supramaxes which are slowing down and to the Panamaxes that are approx. $850/d down from previous 10 days.
Tanker rates moved up in the VLCCs previous week. The increased crude volumes news of OPEC+ helped. Not the same is the case for Suezmaxes and Aframaxes though. Brent crude oil prices are expected to lower at the level of $45/b for at least the first half of 2021 despite vaccine good news, according to Fitch Ratings. A forced series of renewed lockdowns, including strict new measures in Southern California in the United States, the world’s top oil consumer, leads to oil slips today.
With significantly positive GDP forecasts and expectations, resale/secondhand vessels availability at competitive prices and world trade need to recover, first half of 2021 could be the right time for shipping investments, an opportunity definitely worth examining… with REBRAND!
(Source: OECD chart & forecasts, Clarksons, Hellenic Shipping News)
