January turned out to be a devastating month for the bulk carrier spot market. All vessel segments suffered steep falls[ds_preview] in time charter equivalents, with index average rates falling below operating costs.
Prior to Chinese New Year, time charter averages dropped just below 5,000 $ day for capesize vessels, to around 6,000 $ both for panamaxes and supramaxes and to 6,500 $/d for larger handies (38,000 tdw), making the smallest ships the »top earners« within a distressed market.
The collapse came against the expectations. Owners entered the new year in a fairly upbeat mood as analysts were anticipating tonnage shortages due to bunkering and schedule disruptions amid the transition to low-sulphur fuels (»IMO 2020«).
Reports suggest that there were in fact substantial delays in bunker deliveries in many locations. However, the drop in chartering demand ahead of Chinese New Year was too heavy for bunker-related vessel delays to have any positive impact on rates.
London-based Maritime Strategies International (MSI) warns that the bulker spot market is set for a »dismal Q1«, citing falling steel demand in China, supply issues for iron ore in Brazil and a accelerating newbuilding deliveries (annualised +4.8% in Q1).
Spot earnings will remained entrenched below levels of December 2019 during the coming months, warned MSI dry bulk analyst William Tooth who predicts it will take until June for earnings to recover marginally, »particularly for geared bulkers supported by strong grains exports from Europe and the former Soviet Union.«
