Page 158 - ΝΑΥΤΙΚΑ ΧΡΟΝΙΚΑ - ΣΕΠΤΕΜΒΡΙΟΣ 2022

ANALYSIS

No doubt we are all sad that summer has come to an end, although it was disappointing
for most dry bulk shipowners, who saw their daily earnings dropping steeply and wit-
nessed the BDI at 2-year lows.

DRY BULK MARKET:

SUMMERTIME

SADNESS

And although it is natural for market NPLs (non-performing loans) to prop-
players to try to detect seasonal or erty developers have doubled during
other patterns to explain or predict the the first half of the year to CNY11.20
market cycles, the year thus far has been billion, while the bank’s credit losses
somewhat unpredictable. For the past during the same period jumped by 58%
several years, Q3 rates have been mark- y/y, mainly due to real estate customers.
edly higher than those achieved in the That said, there has recently been talk
last quarter, but this year’s weak summer about China releasing circa CNY300
rates have called into question the new billion (or US$44 billion) in infrastruc-
pattern slowly starting to take shape. ture spending. Of course, this is wel-
August closed with Capesize bulkers come news for metals markets, but
achieving a weak US$2,500 per day on it might take several months for said
average, the medium-sized Kamsarmax funds to realise in the economy and
carriers less than US$11,000 daily, and trigger demand.
the Supramax vessels US$17,800/d. At In the year’s first seven months, Chi-
the same time, futures marks have been nese steel production dropped by 6.4%
on a proper freefall, weakening whatever compared to the same period last year.
confidence was left in the market. On a The downward trend in the country’s
comforting note, when the market bot- steel output also justifies the decline
toms, the only way is back up! in iron ore imports, found less by 3.4%
y/y. Further, Goldman Sachs expects
China picture bleak Chinese full-year steel demand to
While the developments in the Rus- decline by 5%.
sia-Ukraine front have definitely shaken At the same time, China has suffered
things up, the main driver of the dry bulk a severe heatwave and drought, the
market (and the one to usually blame worst in 6 decades, affecting hydro-
when the physical market follows a power generation and forcing nearly
downward spiral) is none other than 20 steel mills to temporarily shut down
China. operations for about a week in mid-Au-
It is telling that the IMF has revised gust, which, albeit for a short period,
its forecast downward for China’s 2022 comes to highlight the country’s ongo-
full-year economic growth to 3.3%, ing power crisis and electricity short-
a figure which, if realised, will be the ages and has adversely impacted ore
lowest growth pace in over 4 decades. demand. At the time of writing, the
And although the Chinese banks have spot price of iron ore 62% Fe delivered
lowered mortgage rates and there are to China stands at about US$95/t.
already announcements for upcoming For the balance of the year, we don’t
policy support, the country’s property expect iron ore fundamentals to shift
by Sevi Katemoglou, sector (which consumes about a third of dramatically from the admittedly
Founder & Dry Cargo Shipbroker domestic steel demand) remains weak. uncertain point at which they currently
at EastGate Shipping Inc
Indicatively, China Merchants Bank’s stand. China’s (and the world’s) softer

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