Pacific Basin, a specialist of smaller-sized dry bulkers, is optimistic about the market despite the impact of China’s lockdown measures on cargo volume. The Hong Kong-based shipowner and operator expects demand for minor bulks, grains and coal this year will remain strong, and the freight markets will be further backed by higher tonne-mile demand amid shifting trade flows and global issues about food and energy security. “Changes in trade flows caused by conflict in Ukraine have positively impacted tonne-mile demand for some commodities,” it said in a trading update, adding it currently has no vessels operating out of Ukrainian and Russian ports.

The new wave of coronavirus outbreaks in China, a key buyer of dry bulk commodities, and the resulting disruption to logistics services and factory production have created pressure on the freight markets. Pacific Basin said the recent lockdown of major Chinese cities, including Shanghai, was likely to weigh on demand in the short term. “However, once restrictions are eased the resumption of normal economic activity and government-led efforts to meet national growth targets could provide the market with support later in 2022,” it said. “We expect Chinese demand to remain strong as policy support focuses on investment in infrastructure, manufacturing and green investment which all rely on minor bulk commodities.”

In the first quarter of 2022, its handysize and supramax fleet generated average daily time-charter equivalent earnings of $23,810 and $32,510, respectively, up 117% and 122%. Operating margins in the three months have declined from the previous quarters to $3,320 net per day over 5,160 operating days — but still at relatively high levels. Pacific Basin said it was focused on selling some smaller, older handysize vessels because second-hand prices were high in the short run, whereas its purchasing activity was slowing for the same reason. It currently runs a live fleet of 260 ships, of which 121 handysizes and supramaxes, are self-owned. “We remain committed to our long-term strategy to grow our owned fleet of supramax ships by acquiring high-quality, modern, secondhand vessels, and to sell our older and less-efficient handysize ships and replace them with younger and larger vessels,” it said.