2019 Leaves Shipping With Bittersweet Taste
When it comes to assessing 2019 from a shipping market’s point of view, it appears that the year that we just left behind, was “the year that could have been, but never really materialized as such”. In its latest weekly report, shipbroker Allied Shipbroking said that “2019 has been a year full of surprises and quick shifts in market directions, leaving must utterly perplexed as to what the outcome has been. But beyond all that has transpired over the past 12 months, the overall after taste looks to be a sweet one albeit only just. Just 12 months ago in early January, it would seem that the market was already set to be getting on a wobblily footing, though most of the market fundamentals for both the dry bulk and tanker market were looking set for positive developments to be had”.
According to Allied’s analysis though, “it didn’t take long for all this to collapse in the dry bulk space along with one of Vale’s mine tailing dam. Things were quick to turn sour and it looked like we could be heading for a close repeat of the dire market conditions of 2016. Freight rates were quick to drop, and with owners frantically looking for cargoes to fix as most mining operations in Brazil came to a halt, there was a sense that this would be a hard hit that would be hard for the market to recover from. Yet despite the ominous clouds that were gathering across the sector and the still difficult times being faced by the global economy amidst all the negative geopolitical tensions that had amassed, it still seemed possible that somehow things could find room to recover”.
Allied added that “at the same time things had been almost equally disappointing for the tanker sector as well, although not to the extent noted in the dry bulk sector. The tanker markets were more so a lacking the much-touted positive gains that most had anticipated would occur during the transition period before the IMO 2020 implementation. While even up to the end of spring there was little if any evidence that things were on the positive run. As it would happen though prospects for both these major shipping sectors would rapidly change during the summer and early Autumn months”.
The shipbroker added that “the dry bulk market went from reaching near bottom, to suddenly touching freight rate highs last seen during the early part of this decade. The quick catch up game implemented by trader and miners led to a ramp up in demand, while even as we entered the Autumn months, the shortage of vessels due to maintenance work and regulatory implementations led to rates holding buoyant at what would seem to be a new market normality. Indicative to all this is that Capesize freight rates reached just over US$ 38,000 per day while during the final quarter of the year the three-month average is looking to close at just under US$ 22,500 per day, both of which are impressive feats when compared to recent history”.
Meanwhile, “things were also looking to change rapidly for the tanker market, as a series of events evolved into one of the most impressive booms in market history, with some of the larger crude oil tanker reaching exuberant freight rate highs of even above US$ 200,000 per day. Beyond all this however, it looks as though both these markets have now eased back from their highs, leaving the question as to where do we go from here? And this question will prove to be trickier to answer than what one would expect. The market has now been shocked by the unexpected and with all the change that is set to take place in the New Year, we may well be in for an even more volatile ride than what we have been seeing these past few years. It looks as though all we can do is buckle up and be quick on or feet”, Allied Shipbroking concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide