Strong fundamentals and systemic underinvestment in the dry bulk market has laid the foundation for one of the best decades for shipping in a very long time, according to Joakim Hannisdahl, head of research at Cleaves Securities.

Speaking on a webinar, Mr Hannisdahl pointed to robust Chinese demand for coal and agriproducts, backed up by strong support from Brazilian iron ore and new trades created by Beijing’s ban on Australian coal imports.

“The capesize market is usually sluggish until September or October but this is a year of post-coronavirus recovery, so all bets are off,” he said.

Looking beyond the end of the year, Mr Hannisdahl identified the very low orderbook for dry bulk ships as a “gamechanger. The dry bulk orderbook now stands at 6% of the fleet on the water, equating to net fleet growth of 1-3% per annum. This is the lowest orderbook on record (since the mid-1990s),” he said. “We need very little demand growth to propel fleet utilisation into very good territory.” Demand for dry bulk capacity is forecast to grow by 7% in 2021, with modest growth anticipated for 2022 and 2023, but even so it will still be enough to outpace fleet growth.

This will lead to improved fleet utilisation, which feeds through to higher asset prices. He said vessel prices have already risen by 12% in the past few months. “We can expect an increase of 30% over next year, and 50% over next two years,” Cleaves’ forecasts suggest. Mr Hannisdahl said that despite a 20-year period of fleet growth, there had been little serious investment in any of the major sectors of shipping, which explained the low orderbook and the positive sentiment.

The opportunities this has created has not be lost on investors, he suggested. He argued that there is “a large capital influx coming into dry bulk at the moment”, encouraged not only by “fantastic fundamentals” but also by “generalist money trying to do the post-coronavirus commodity play”.

When external finance moves into a small sector such as shipping, he cautioned, there is likely to be big movements in price and turnover. “This feels a lot like early 2007,” Mr Hannisdahl said. “We expect 30% upside in asset prices.”