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What are our expectations for the dry bulk cargo market in 2021?

Shipbroking company Allied Shipproking stated in its latest weekly report:

We have a clearer understanding of the year that has just passed. What are our expectations for the year ahead? This year may repeat the situation of last year, but operating under the tail risk mechanism is unique. In view of the many risks that will be faced in the future, most people have reservations about returning to a'normal state', but there are still many people who are very optimistic about the next 12 months.

What are our expectations for the dry bulk cargo market in 2021?
What are our expectations for the dry bulk cargo market in 2021?

Allied research analyst Thomas Chasapis believes that no matter what the outcome of the epidemic, when this moment finally comes, we may be caught off guard. For dry bulk shipping, 2020 is a step backwards to a large extent, especially in the first half of the year, if there is no epidemic, it will develop in a completely different direction. However, we are not in a hurry to reach a conclusion. In fact, many market segments are performing well.

What are our expectations for the dry bulk cargo market in 2021?
What are our expectations for the dry bulk cargo market in 2021?

The second-hand ship trading market recovers

Chasapis believes that it is important to have a liquid market with relatively optimistic trends and healthy buying intentions, more important than the short-term positive effects currently seen. The asset price levels of different ship types and ship ages are all on a return to average (close to their 5-year average). This situation excludes excessive speculation, and it is basically certain that the market has begun to recover and this trend will continue.

Improved market supply and demand

Chasapis said that for most of the year last year, the dry bulk cargo market was under greater pressure, and the increase in most ship-type markets was very small. The global economic environment is relatively turbulent, and demand faces many potential unfavorable factors. At the same time, the number of fleets has increased moderately by 3.09%, and the number of orders held has decreased by about 38%. This is a key step towards a more balanced long-term supply and demand relationship. This development trend has not yet produced results, but it should be taken seriously.

What are our expectations for the dry bulk cargo market in 2021?
What are our expectations for the dry bulk cargo market in 2021?

Chasapis concluded:

We face many unknown and vague trends. Many people think that the average annual revenue is low, and I think that given the risks encountered by the industry, it is very precious to obtain such a level of income. In addition, the momentum of the second-hand ship trading market is strong, reflecting the positive long-term prospects of the industry. Of course, in capital-intensive industries, a good financial environment is also essential. If there is another negative change in the situation, the recovery process will be delayed, and funding difficulties are likely to trigger a new round of downturn in the market.

Source: China Ocean Shipping e-Journal