NEW YORK Dry bulk shipping rates are expected to remain firm after a recent climb due to limited ship availability and long lead times following financially lean years for companies.
The large asset classes are extremely favorable as a result of underordering, Ziad Nakhleh, chief financial officer of Athens, Greece-based DryShips Inc., said during a panel discussion at Capital Link Inc.s eighth annual Shipping Forum in New York, adding that lead times for capesize and Panamax vessels from top Japanese yards are about three years.
The rise has been led by record Chinese iron ore imports, according to Symeon Pariaros, chief administrative officer of Maroussi, Greece-based Euroseas Ltd., which are expected to continue due to increasing world ore supply and a recent focus on reducing pollution in China.
The imported (iron) ore does not have to be beneficiated, which means fewer emissions in-country, according to Fred Gordon, senior vice president of corporate affairs at Athens-based Navios Maritime Holdings Inc.
Dry bulk shippers, meanwhile, are reluctant to lock in forward contracts because they expect rates to rise further.
Weve been keeping (our customers) on spot because we expect rates to go up, Nakhleh said.
But while the current upcycle is mainly supply driven, given the large amount of new global iron ore capacity coming online and Chinas willingness to stockpile, demand would have to catch up eventually, one panelist warned.
In the longer term we still depend on demand from China. We must not forget this side of the story, Egil Husby, chief risk officer at Oslo, Norway-based shipping company Western Bulk AS, said.