Dry Bulk Cargo Freight Rates To Stay Flat In Short Term

Although Q4 outlook looks bleak, significant improvement is expected in the Baltic Dry Index, particularly from the latter part of 2019 on lower fleet growth prospects

Though freight rates struggled with overcapacity and weak demand in 2016, in 2017, the dry bulk market underwent are markable recovery while 2018 saw the overall market improve in the first three quarters.

However, in the short term, freight rates would remain flat with the Baltic Index average of 2018 at 1,300-1,400 points, as per Ravi Chopra, Director, InterOcean.

The reasons for the flat trend, Chopra said, were that Chinese iron ore and coal imports were not looking bright in the short term. “There has been a 5 percent decrease in Chinese iron ore imports till October 2018 compared to the same period in 2017. China has already restricted imports of coal into 2018 to 2017 levels which stood at 471 million tons. Total imports till October 2018 stood at 251 mt. Chinese imports of US soya beans have been almost non-existent in the recent past,” he said. Chopra was speaking at the 12th Indian Coal Markets Conference, organised by mjunction services limited recently.

Media reports also say that China’s imports of soyabeans for this season will drop to 84.7 mt, down 10.79 percent from last year. Thus, these lower volumes mean there will be weaker demand across vessel segments.

The IMF has lowered the outlook for the Chinese economy for next year to 6.2 percent from 6.6 percent in 2018. The IMF also expects the US economy to fall to 2.5 percent growth next year from 2.9 percent this year amidst the country’s escalating trade war with China.

Bleak Q4 outlook

In 2018, overall, the dry bulk market improved in the first three quarters of 2018, despite trade war fears. The average freight rates during the third quarter was generally higher than in the second quarter of 2018 and Q3 of 2017.