A senior executive of major ship brokerage Braemar Seascope said that the global dry bulk freight market is expected to stay weak throughout 2012 and into 2013 due to an oversupply of ships.
Mr Peter Malpas, Head of Research at Braemar, a unit of Braemar Shipping Services plc, expected the freight market to see signs of recovery in 2013, with the extent of an upturn depending notably on how supply is adjusted. He said that "Scrapping of ships is really key for the recovery."
The industry has been struggling with a supply glut that has outpaced demand for commodities such as coal and iron ore. Shipowners went on an ordering spree before the economic turmoil in 2008 and have been hit this year by the pace of ship deliveries, stepped up in recent months.
He said that the curbing of fleet capacity, whether through scrapping, delivery delays or order cancellations, would allow the market to recover faster in 2013 and benefit from industrial demand being driven by
. He added that "We see strong demand for shipping soaking up supply tonnage returning the market to healthier levels in 2014." China
Mr Malpas said that scrapping had already increased significantly this year but an expected 30 million tonnes of scrapped capacity this year in the dry bulk sector would still be outstripped by forecast new capacity. He added that "It's what we scrap next year that will affect 2013."
Source: Steel Guru (Sourced from Exim News Service). 15 October 2011http://www.steelguru.com/international_news/Dry_bulk_market_projected_to_remain_weak_till_2013/229826.html