The economic crisis triggered by the Coronavirus has had a heavy impact on the dry bulk market, plummeting Capesize freight rates to levels never seen before, with a downturn that reached negative peaks of -70% compared to 2019. The Baltic Dry Index which, in December last year, was up to 1600 points, has in fact been down to 433 points over the last few days, with values not far from the 291 points in February 2016.
However, the impression of many analysts and observers is that we have reached rock bottom and that now there is no other viable option but to climb back up the slope.
“For the second half of the year, we expect a definite turnaround. Many countries are gradually emerging from the lockdown situation they were stuck in during the critical months to deal with the emergency and this will have a positive impact on the recovery of the dry market.”This was what the Chief Executive of Navios Maritime Partners L.P., Angeliki Frangou affirmed, during the press conference to present the company’s quarterly results.
Navios, a shipping company active in both the dry bulk and container transport markets, has a fleet of 48 ships, including 35 bulk carriers and 10 containerships. The company closed the first three months of the year with a net loss of 10.7 million dollars, slightly worse than the $9.5 million deficit in the same period last year.
Nevertheless, the mood for the near future remains positive: “We expect dry trade to grow by 4.3% again in 2021,” says Frangou, who points out that in this first part of the year the Capesize fleet available has already been reduced by 1% due to the collapse of newbuilding orders and the temporary withdrawal of units sent to retrofitting yards for the installation of scrubbers from the market.
The reduction in hold capacity caused by the combined IMO 2020-Coronavirus should therefore support the dry market in the short to medium term, helping to raise freight rates in the next quarter.
Translation by Giles Foster