Average spot rates across dry bulk shipping fell on Wednesday as global demand for steel continues to wane on the back of a weakening worldwide economy. Global steel usage is expected to come in at 1.8bn tonnes this year, down from 1.84bn in 2021, according to the World Steel Association.

China, which is dealing with a struggling real estate sector, is expected to consume 914 MMT of steel in 2022, down from 952 MMT last year. “China is in a disarray, Europe is in a recession and things are slowing down here in the US,” John Kartsonas, founder of Breakwave Advisors, told TradeWinds. “Why would dry bulk be strong?”

Breakwave is an asset management firm that runs a dry bulk ETF-trading platform. The Baltic Exchange’s Capesize 5TC of spot-rate averages across five key routes declined 3.53% on Wednesday to $15,637 per day. “The capesize market was underwhelming in its fixing activity today as rates continued to ebb away,” Baltic Exchange analysts wrote on Wednesday. “Several major charterers were heard in the market on West Australia as usual but only a couple of fixtures were reported.” The Baltic Exchange had no reports of capesize fixtures for Wednesday, but it did indicate that Kepco Tender hired a panamax and six bulkers got put on time charters.

The Panamax 5TC slipped 3.15% on Wednesday to $18,065 per day, while the Supramax 10TC dipped 1.58% to $17,950 per day.

“Capes have underperformed last year’s averages throughout 2022 but now panamax and supramax rates have also slipped,” Jefferies analyst Omar Nokta wrote in a note on Wednesday. “Weaker steel demand has impacted iron ore activity, which has masked the favorable coal market conditions that have gotten stronger in recent months. “A key question revolves around how mid-size ships will perform in a softening economic environment.”

Total seaborne dry bulk trade is now expected to fall 1.6% in 2022 from 2021, but tonne-miles should slip only 0.5% due to changing trading patterns after the war in Ukraine, according to Clarksons Securities. “Iron ore trade is driving the decline in volumes as seaborne iron ore volumes are set to decline 2.2% year over year in 2022,” Clarksons Securities said.

Looking to 2023, Clarksons Research said it foresees a 0.8% uptick in tonnes and a 1.4% increase in tonne-miles but notes that the fleet is only expected to grow 0.5%.