Throughout 2019 shipping markets, and especially the dry bulk market, has been challenging.
Supramax earnings4 averaged USD 9,914 per day in 2019, down from USD 11,485 per day in 2018. Soft trade demand combined with continued newbuilding deliveries and limited recycling activity caused a challenging market in 2019 with few period fixes and low spot rates.
China’s share of dry bulk commodity imports has grown significantly over the past ten years from about 25% to about 40% in 2019 in volume terms. Entering 2020, the Coronavirus lockdown in China has reduced chartering activity, adding an extra layer of uncertainty to already unstable dry bulk fundamentals, making prospects for 2020 ambiguous. Demand for medium-sized supramax and ultramax vessels, which is closely linked to economic growth, is expected to remain soft some time ahead. A slowdown in deliveries after first half of 2020, should, on the other hand, contribute positively to the supply-demand balance. Some shipping analysts therefore believe that a market recovery will take place in 2020 and forecast supramax freight rates to gradually return to its 10-year historical average of USD 11,000 per day over the next 12-24 months.
In respect of open hatch, world seaborne pulp demand seems sound and is expected to continue with stable growth in seaborne volumes, primarily from the Americas to Asia. Together with increased project cargo volumes, Grieg Star, therefore, expects improved earnings in its core business in 2020 and beyond.
During 2019, the Zero Emission Energy Distribution at Sea (ZEEDS) initiative was launched, and new partnerships were established to explore the fastest way to zero-emission shipping. Aligned with the Grieg Group’s ambition to “Restore our oceans”, Grieg Star expects to leverage further on this initiative and new partnerships going into 2020. From January this year, a new business unit, Grieg Edge, is established to identify and develop new business opportunities within shipping, ship owning and related maritime segments, with a strong emphasis on sustainability. A multidisciplinary team with broad experience from shipping, finance, technology and start-ups are in place. With an increased focus on sustainability, transparency and a green transition of the maritime industry, Grieg Star expects several interesting opportunities to emerge during 2020.
4 BSI 58TC