Owners pinning hopes on a dry bulk rate recovery in 2021 will have to adjust their outlook based not just on China’s continued strength of demand, but also on the scale of recovery in the rest of the world.

For seaborne iron ore trade, soaring prices indicate not just firm demand, but also actual and anticipated constraints on supply, according to brokerage Simpson Spence Young. “For the main arterial capesize iron ore trades, the ability of mining companies, especially those in Brazil, to raise output will be crucial in shaping this year’s trade growth,” it says in its 2021 outlook.

Coal, on the other hand, has suffered the greatest reverse of the main dry bulk cargoes in 2020, on course for an annual decline of more than 100m tonnes. “Prospects for recovery are complicated by not just the pace of recovering demand, but also by the structural challenges facing producers from worldwide efforts to reduce carbon emissions.”

Again, China’s coal import policies are likely to have far-reaching effects. At present, the apparent aversion towards Australian coal and rising domestic steam coal prices has benefited coal suppliers in Indonesia, and US coking coal exporters have reported more interest from China.

Fortunately, grain trades in contrast to coal, are maintaining their upward trajectory, SSY noted.

Another key question this year for bulker owners is the extent to which fleet inefficiencies will continue to distort vessel supply-demand balances.

Since the beginning of 2020, the capacity of the dry bulk fleet expanded by a net 3.9% to mid-December, with demolition activity low by historical standards, but fleet carrying capacity during this time has faced numerous constraints from coronavirus-related delays resulting from crew change complications and quarantining in addition to chronic berthing delays in China’s terminals since June.

“The dry bulk market of 2020 witnessed many twists and turns for both vessel demand and supply, and this year will no doubt bring more,” said Derek Langston, head of SSY consultancy and research.