The dry market has had a much stronger start to 2021 than forecasts had suggested, with expectations for the rest of the year and into 2022 and 2023 just as positive, said Nicolai Hansteen, head of the S&P and newbuilding teams at Lorentzen & Stemoco. He told a Mare Forum webinar that the reason for his optimism was the limited number of bulk carriers on order. Andrew Wilson, head of energy research at Barry Rogliano Salles, was more cautious about prospects for the global economy in the coming year. An easing of lockdowns in Europe and the US in the second half of the year “could act as a springboard to a sustainable market,” he said. “Looking at prospects for 2022 onwards, we are looking at a supercycle. Much will depend on whether owners remain disciplined regarding their ordering activity,” he added.

Further positivity came from Sevi Katemoglu, founder of shipbroker Eastgate Shipping, who noted that supply and demand fundamentals make a good case for healthy dry bulk returns in the short to mid-term. Large infrastructure-intensive stimulus packages rolled out by the Chinese government in response to the impact of the pandemic triggered record high steel output last year, she said, and consequently high iron ore imports into the country. Ms Katemoglu expects that impetus to continue throughout this year. This optimistic sentiment comes despite consensus that coal’s use will be reduced in the overall energy mix. However, China’s grain needs are “relatively inelastic”, she observed, and the country’s demand remains strong. The dry bulk orderbook is currently at historic lows, about 6% of the existing fleet, a position not seen since the mid-1990s. Ms Katemoglu believes this is partly an industry reaction to the International Maritime Organization’s environmental targets. “There is simply not enough confidence out there for a shipowner to proceed with newbuild ships.” That lack of confidence lies behind the low order book and justifies low projections for net fleet growth capacity forecast for 2021. As a result, she added, even a limited increase in demand would produce higher returns for a long time.

An increased focus on sustainable shipping, underlined by Intercargo secretary-general Kostas Gkonis, will add a further dimension to the dry bulk sector. While much has been said about the demise of coal as a cargo, Martin Wattum, head of projects and business transformation at Torvald Klaveness, acknowledged he was unable to say whether this would take place “next year or in the next 20 years.”

Asked whether cargo owners were willing to support shipping by paying more to support a sustainable business model, Mariano Mantaras, global head of raw materials and logistics at Liberty Steel and Alvance Aluminium, said there was a requirement for cleaner and greener logistics throughout the bauxite-alumina-aluminium supply chain. “The industry will invest, and we will demand investment in the transportation side. It will probably mean higher rates at the beginning, but the freight market is one of the most competitive markets so the freights will adjust to be competitive,” he said. Asked whether charterers would offer a premium to more environmentally friendly ships, Mr Wattum said Torvald Klaveness has never received any premium for operating combination carriers that reduce carbon dioxide emissions by 30%. “Cargo owners have never looked that much into the CO2 scope of things. But now we are being asked by charterers about CO2 emissions per transported tonne of cargo, so we are seeing interest to a larger degree since Greta Thunberg than for many decades.”

Ms Katemoglu added that most charterers have been unwilling to take energy-efficient ships for five or more years at premiums needed by shipowners. However, she believed energy-efficient bulk carriers should be able to benefit in future because of the fuel savings they can offer, and command an increased value in both newbuilding and second-hand markets. “Initially the cost will be borne by the owner but at some point this should be passed on to the cargo owner,” she said.

The speakers broadly agreed there is little appetite for providing adequate financial support for sustainable shipping. Mr Wattum said it was critical for cargo interests to take a greater interest in CO2 emissions. “We are expecting that to happen, and we are looking at new technologies so we can be ahead of the game when it happens. We are focusing on the cargo.” However, Mr Hansteen, Ms Katemoglu, or Mr Wilson could offer no evidence that charterers were offering premium rates for environmentally friendly ships.