You can forget about the usual seasonal lull in bulker markets ahead of the Chinese New Year holiday this year, according to a panel of major bulker owners. The dry bulk market will this year see a more muted impact from the holiday on 12 February, Martyn Wade, chief executive of Grindrod Shipping Holdings, explained during a Capital Link webinar on Tuesday. Celebrations in China this year are being staggered over a month-long period and factories will remain open during this time, he added. China cannot afford to have 800m moving freely around the country and the related economic impact that a spike in Covid-19 infections would have, Wade said. “They will do it in a completely different manner. I think this is maybe where people have been getting it wrong, this assumption that the market will now fall off a cliff,” Wade said. “What we’re picking up is that it might ease a little bit, but this is this is going to go through, it’s going to be like no other Chinese New Year.”

Aristides Pittas, chairman and chief executive of bulker owner Eurodry, said that this effect is already being borne out in the market, which should remain stable for the next couple of months. “We are already [at] the 20th of January. The dry bulk market usually at this stage is very slow. It isn’t this year — we have the highest dry-bulk market of the last decade in January up to now,” Pittas observed. “This is an indication that … there’s a lot of demand there. “I think that there is a lot of momentum here that will gather within the next couple of months and, coupled with what Martyn said, we will see a pretty stable market during the next couple of months,” Pittas added.

The threat of higher oil prices could also help keep bulker rates firm in the short term, Star Bulk Carriers’ president Hamish Norton said during the webinar. “It’s something that people don’t pay attention to often, but charter rates in the dry-bulk market are more or less proportionally affected by increases in the oil price,” he explained. “When bunker rates go up, there is pressure on the fleet to slow down and the only thing that keeps the fleet from slowing down are high charter rates.” Consistent demand for dry-bulk shipping will leave no choice but for charter rates to rise, he added. “With vaccines being distributed and demand for jet fuel and other oil products going up, oil prices have been strong,” Norton said. “Bunker prices have been strong and getting stronger — and that’s pushing charter rates up. That’s gonna continue, we think.”

Meanwhile, bulker owners hope that trade tensions between China and Australia will result in more inefficient trade routes and more tonne-mile demand for dry-bulk shipping. China has already banned imports of coal from Australia but is still accepting its iron ore. But if China bans Aussie ore or diversifies its international suppliers, shipowners hope that the country will become more dependent on imports from further afield, such as from Brazil and Africa, the webinar heard. Meanwhile, the price of Australian coal has halved, making it amongst the world’s cheapest, and the commodity is making its way around the world on longer-haul routes. “Australia now is obviously importing a lot into India, Bangladesh and places, but also to Europe, so we’ve got a double whammy on this. … Long may it last. I think it’s very, very positive,” Wade said.

Weather is also playing its part, he continued. “With La Nina, you’ve got northern Europe, northern China, in particular, and northern northern Asia having incredibly cold winter,” Wade said. “A lot of the countries — China, Korea, Japan — are short on coal; LNG prices are through the roof, and with Australia blocking China, they’re getting their coal from elsewhere — Columbia, South Africa, even ultramaxes out of the Black Sea.”