An impressive recovery in Chinese dry bulk imports has protected the industry from the effects of falling demand around the globe.
In recent months, the strength of the recovery in major Chinese imports have been strong enough to make up for lower activity in the rest of the world, with all ship sizes above their break-even levels.
The dry bulk fleet has seen both deliveries and demolitions rise over the past few months, while contracting has fallen steeply.
So far this year, the dry bulk fleet has grown by 2.8% and breached 900m Dead Weight Tons (DWT) for the first time. Companies are expecting demand to grow, and BIMCO predicts full-year growth to reach 3.5%. However, the order book has fallen to 63.4m DWT, its lowest level since April 2004.
Deliveries have risen by 7.8m DWT from this time last year, with 33.9m DWT of new capacity arriving on the sea in the year to date. Of this, just less than half of the tonnage comes from the 70 new Capesize ships that have been delivered.
A sharp increase in fleet growth has been somewhat offset by an increase in demolitions, but the fleet continues its growth. A 69.4% increase in demolitions, compared with 2019, only amounts to 8.7m DWT being demolished.
The pandemic and the poorer outlook have caused a 59.1% fall in contracting activity, as owners have not wanted to invest during a recession plagued by uncertainty. Only 108 new dry bulk ships have been ordered in 2020.
Given the importance of China to the dry bulk market, the recovery in industrial production and massive imports there have been enough to support the market. However, the rest of the world needs to join the recovery wave if this is to be sustained.
With COVID-19 cases still rising in certain parts of the world, experts predict that a global recovery seems some way off.
