While high dry bulk spot rates can be attributed to demand recovery and inefficiencies, the “strongest “influencer” has been high bunker prices which is slowing ships down, according to Star Bulk Carriers’ president Hamish Norton. That is a positive as “high fuel is great for shrinking supply,” he said, adding that fleet growth could be less than 2% this year. Ships with scrubbers were currently benefitting from a fuel spread in the region of $180-$200 per tonne, he added. Speaking on a Capital Link dry bulk panel, Mr Norton said he was optimistic for the market over the next two to three years. He expects spot rates for capesizes to average $30,000 per day this year, with kamsarmaxes averaging $25,000, and handysizes potentially “going through the roof”.

While other panelists concurred with the views for the larger-sized bulkers, Grindrod Shipping’s chief executive Martyn Wade expects handysizes to average $25,000-$30,000 per day in 2022. That is in line with the bigger ships. Tonne-mile demand growth was pegged at between 4%-7% this year against fleet growth estimates ranging from less than 2% to 2.5%. In the short-term, the situation in Ukraine was a positive for dry bulk shipping, but in the longer-term, it could have a negative impact, said Golden Ocean’s chief executive Ulrik Andersen. He said he was “deeply concerned” about the situation and hoped that the conflict would end soon. The company has little exposure to the area after two of its capesizes turned back when war broke out. On the one hand, the re-allocation of coal with Europe getting more supplies from Australia instead of Russia can survive a prolonged conflict, while on the other hand, grains, although replaceable in the short-term, will see demand destruction over time, he said.

According to Mr Wade, minor bulks demand will be steady through the year. He expects a rise in tonne-miles from the Russia/Ukraine crisis as replacement commodities are sourced from further afield. Steel trades are also looking positive, especially when the US starts its infrastructure investments. Mr Norton expects that strong demand for steel exports from China could be on the cards as Europe limits its imports from Russia.

Meanwhile, iron ore trade could be steady this year, and Brazil’s mining giant Vale would need to double volumes starting in the second quarter in order to meet its full-year guidance of 320 MMT, according to Stamatis Tsantanis, head of capesize owner Seanergy.

Given where spot rates were, the allure of purchasing secondhand assets rather than ordering new ships was discussed. Secondhand ships were a “better investment decision” as it provides options for the next two to three years, said Mr Norton. Looking at the forward curve for 2024-2025, new ships being delivered will enter when the market will not be as high, which does not make a good hedge, he said, adding that there was reason to wait before ordering given also the uncertainty about what type of ships will be needed by 2030. Yards were not keen to take on bulker orders as they preferred to build the more expensive containerships or gas carriers, and owners would struggle to find berths especially for the smaller bulkers, according to Safe Bulkers’ chief executive Polys Hajioannou. He expects to buy the odd secondhand ship here or there this year, although he will steer clear of five-year old kamsarmaxes priced at $40m, he said.

While he does not anticipate an increase in scrapping this year, he does expect many of the older ships to exit the fleet in the middle of the decade as charterers will not want to hire this tonnage with highly priced commodities on board.