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Global dry bulk shipping market
seen growing steadily

2017-06-05

McKeil Marine's Evans Spirit  won the International Bulk Journal's 2016 Ship of the Year Award during the IBJ's Salute to Excellence in the Maritime Bulk Industry gala awards ceremony in London, UK on November 21.
"It's a fantastic way to closeout our 60th anniversary year: having a vessel named after our founder, Evans McKeil, win this prestigious international award," said Steve Fletcher, President and CEO of McKeil Marine.
Acquired by McKeil in 2015, the Evans Spirit is a cargo ship with the shallow draught characters of a tug and barge; however, compared to a tug-and-barge unit, she can transport approximately 40 per cent more cargo about 50 per cent faster on a very similar amount of fuel.  She is in service throughout the Great Lakes and St. Lawrence River.
Evans Spirit was shortlisted for 2016 Ship of the Year competing with three other vessels: CS Bright, Mitsui OSK Lines, Japan;  Damen Shipyards, Netherlands; and MN Baroque, Swiss Marine, Switzerland. The award is presented to the owner, operator or builder of an outstanding individual bulk ship. Judged on operational efficiency, design innovation, safety and environmental protection, the Evans Spirit was selected as winner. (Photo Paul Beesley).

The outlook for global dry bulk shipping remains positive given the shrinking supply-demand gap, according to the latest edition of the Dry Bulk Forecaster published by London-based shipping consultancy Drewry.

With high demolition activity and low deliveries the fleet is expected to grow at a slow annual rate of 1% over the next five years, while tonne mile demand will grow at a faster pace of around 3% per annum. As supply and demand becomes more balanced over the forecast years, charter rates are expected to improve gradually.

Drewry has also researched and flagged the impact of renewables on the dry bulk trade, as this has the potential to reverse charter rates, and has built two scenarios based on current trade developments.

The Chinese government's stimulus package in 2015 supported steel production last year and is likely to aid the steel industry over the next two years. The relative cheapness of imported coal (cfr) over domestic coal makes room for increased coal imports, supporting the rally in rates for the rest of the year.

However, Drewry says the declining cost of producing energy from renewable sources and the general acceptance that COP21 may reduce the use of coal as a major energy source is a threat to the dry bulk shipping trade. Although the share of renewables in total energy production is quite low for most major economies, any shift away from coal could hamper the dry bulk trade over the medium term (1-3 years).

Looking at demand, Drewry has identified three concerns that might impact dry bulk shipping rates in the near future.

First, the National Energy Administration of China plans to increase coal consumption by only 0.7% annually over the next four years, and plans to meet its energy production targets by making coal use more efficient.

Secondly, China also plans to cut down on excess steel capacity by 100 million tonnes over the next five years by shutting down illegal, sub-standard, steel-making units. The combined efforts of China and India to increase the share of renewables in their energy mix could bring down the dry bulk market to an era of negative growth in the short to medium term.

Thirdly, India plans to increase its thermal coal power generation to 236 GW in 2022 from the current 186 GW, an increase of 4% annually. Coal India, which meets most of the country's coal requirements, has been increasing its output by 5.8% annually and the government has been making additional efforts to increase Coal India's output faster. To produce 236 GW thermal coal power in 2022, India will require 159 million tonnes of imported coal, meaning an annual fall of 1.8% in imports.

 
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