The dry bulk market is expected to follow a similar trend to the past year, according to market participants. “With the holiday break behind us, the dry bulk markets return to a state of uncertainty driven by the same factors that led to the record high volatility of 2021,” said US-based consultancy Breakwave Advisors. A major issue likely to continue this year is the draconian coronavirus-related disruptions in China, leading to delays and port congestion, it said in a note, while weather-related disruptions are also affecting shipping operations. Some Chinese ports have had to close due to gales this week, according to ship agency Wilhelmsen.

Meanwhile, energy shortages across the globe are likely to linger, supporting coal movements, while vessel substitution is also likely to persist providing support to the smaller-sized bulk carriers, Breakwave said. Uncertainty related to Indonesia’s surprise ban on coal exports led to panamaxes climbing and Supras dipping, with 140 bulkers at anchor off major ports. Breakwave expects heightened volatility until at least spring when some of the factors may start to wane, it said.

EastGate Shipping, a brokerage in Greece, expects coal demand to continue to ride high, given economic recovery around the world combined with high gas prices that make coal-use more competitive, a good sign for the dry bulk market. While China’s thermal coal imports are expected to remain stable at around 258 MMT this year, India’s imports could rise by 8.5% to about 164 MMT, it said in an end-year report.

Another bright spot is long-haul grains trades, particularly Brazil to China soyabeans, which should support the medium-sized bulkers,  it said, adding that with Brazil’s early harvest, more cargoes will be “put into the market relatively early” in the first quarter. Brazil’s soyabean exports during the 2021/22 season are projected to gain some 15% to 94 MMT, year-on-year, it added. That will offset lower export volumes from the US, expected to drop by almost 10% to 56 MMT.

For iron ore, the Beijing winter Olympics was seen to have weakened demand, and EastGate expects a rebound following the games, with imports up almost 3% on 2021. In the first 11 months of the past year, China’s iron ore imports decreased by 3.2% to 1.04 BMT versus the same period in 2020. But concerns over China’s property sector developments will linger given the Evergrande default.

Meanwhile, the macro picture “remains cautiously positive,” EastGate said, adding that it is “indeed probable” for demand, which is expected to grow by 3%, to outstrip supply, given the low orderbook, which is at about 7% of the existing fleet in deadweight terms.

This becomes more acute if the Omicron variant plays out in a way that port disruptions tie more ships to congestion and, therefore, reduce spot supply, it noted, adding that it is bracing itself for “higher-than-usual volatility which will require particular intuition and sharp reflexes from all market participants”.

Separately, US investment bank Jefferies expects grains and minor bulk trades to continue to support bulker earnings, but questions remain about China’s economy and its import requirements for key dry bulk commodities. “We believe there will be ongoing tension between Chinese regulators trying to pursue economic growth and stability while also trying to improve air quality, which could have downward pressure on iron ore and coking coal demand,” the bank’s equity research head Randy Giveans said in a report. “As such, Chinese emissions regulations and other measures to curb steel production remain a wild card in coming months.”

On the supply side, it expects the growth rate this year to slow to 2%, with further easing to 1.6% in 2023, with vessel removals to continue to be much lower than the elevated levels seen in 2020, as the “dry bulk market looks poised for continued strength following a robust 2021”. Jefferies forecasts capesizes to average $26,000 per day in 2022, with panamaxes and supramaxes at $22,000 per day, and handymaxes at $19,800 per day.