Shipping Strategy expects the dry bulk market to peak this year, earlier than previously forecast. With demand growth levelling off at 4%-5%, in line with historical averages, and fleet growth at 2%, after scrapping, the market looks to be in owners’ favor, the UK-based consultancy said in an outlook report.

Demand growth last year came in at 7.6% in volume terms, which translated to 15% activity growth for capesizes, as measured by tonne-miles adjusted for productivity measures such as port times, sailing speeds, and dry dockings. Fleet growth was at 3.4%.

“Even with the lower demand figures this year, the favorable demand-supply fundamentals will see freight rates in all bulk segments up a notch versus last year,” its founder Mark Williams said.

This year’s demand figures consider a slowdown in China, where economic growth is forecast at 7.2% versus 8.1% in the past year. Capesizes are highly correlated to China’s gross domestic product outcomes due to the heavy-reliance on steel-making commodities, while panamaxes respond to wider emerging markets GDP, according to Mr Williams. China’s slowly imploding property market may therefore derail demand for steel and construction materials, both of which will fall under the country’s carbon trading system this year, he said, which may in turn affect bulk carrier demand. “But it’s not just a China story as the slowdown is partially offset by activity in the rest of the world, which has led to a trade surplus,” he said, adding that he assumes the same level of fleet inefficiencies as last year.

The earlier peak in the cycle, which was forecast for 2023, is due to stimuli related to the public health situation, which also pushed back new deliveries, he said. Meanwhile, new orders are being stymied by a shortage of shipbuilding capacity, high newbuilding prices and continuing uncertainty over which low-carbon fuel solution to choose, presumably for all “the latent demand to bubble up later this decade,” Mr Williams said. About 300 bulkers were ordered in 2021, a third of which were placed in the final quarter, he said. Only a quarter had some form of low-carbon technology specified.

About 20m dwt are due for delivery this year in what may pan out to be a low scrapping year, and 17m dwt in 2023.