Bulker owners believe in a promising future given the low supply growth which should be kept in check for two more years at least. Speaking on a recent Arctic Securities’ webinar, the owners from five companies said strong demand will continue to outpace the supply side leading to a healthy scenario for freight rates. 2020 Bulkers chief executive Magnus Halvorsen said deliveries of new vessels will drop to 10m dwt next year from an expected 18m dwt this year. That compares with 25m dwt delivered in 2020. On the demand side, the biggest surprise has come from the coal market, with export volumes rising by 7% year on year, despite the focus on environmental concerns, he said.

Tonne-miles have similarly increased as China sources more product from the US and Atlantic basin, while Australia ships more to Europe because of trade tensions with China. In addition, more coal was being sourced for power plants given the high gas prices being experienced. Mr Halvorsen said it was a “healthy supply-demand picture” that was driving the strength in rates, rather than a congestion-led rally. Given the bullish stance, the forward curve was “mispriced” for next year and 2023, he said.

The higher demand could be seen most acutely in spring when vessels were operating at full speeds, according to Belships chief executive Lars Christian Skarsgård, who agreed with the 2020 Bulkers’ chief executive. Every additional one knot increase in speed led to a rise of 5%-8% in tonnage supply. He noted that the infrastructure boom was not just a China-story with “enormous demand for cement and rebar steel, among other commodities, from the emerging market, for example for offshore wind installations”.

The market is moving from a demand story to a supply story, said Golden Ocean chief executive Ulrik Andersen. Even if stimuli may taper off, demand will still outweigh supply growth, in part due to looming regulations, and there will be little change before 2024 because of yard capacity constraints for newbuildings. Mr Andersen is looking to shed older tonnage as secondhand values increase. He expects vessels older than 10 years to face problems going forward.

Thanks to muted ordering at present, the supply side looks “attractive”, said Star Bulk senior vice-president Herman Billung, despite there always being a black swan event like the recent news about Evergrande, China’s largest property developer, likely defaulting, which dominated headlines around the world. The executives said they were not too worried about the fallout impact as any potential slowdown in China will be offset by rising demand from the rest of the world. For example, steel production globally, excluding China, is pegged at 10% growth this year, at a time when China’s output gain is estimated at 3%-4%.

Even if construction were to fall by 10%, the impact on dry bulk demand would be 1%, according to Mr Halvorsen. “For China to be a problem, we would need to see a slowdown in other areas too.” The Winter Olympics in Beijing early next year may help support rates, and even as iron ore prices have dropped by half to the $100 per tonne level, steel prices have held up, and even with the lower iron ore prices, miners can still make a tidy profit, with production costs of around $15 per tonne.

However, the property sector issue is “one to watch”, said Klaveness Combination Carriers head Engebret Dahm, who also expects low ordering until about 2023. He expects strength in dry bulk rates to continue next year, and combined with a recovery in the tanker market, should be “as close to nirvana” as one can get.