Navios Maritime Partners chief executive Angeliki Frangou has been vocal that she sees the current moment in shipping as fraught with uncertainty. But with that comes one certainty in her outlook: inefficiency. “We are living in a world of a lot of inefficiencies,” she said in an interview with TradeWinds at the Navios Group’s Piraeus headquarters. Driven first by the pandemic and then by the geopolitics surrounding Russia’s war on Ukraine, those inefficiencies are driving tonne-miles, another term Frangou used frequently at her public appearances during Posidonia 2022 in Athens, across the three sectors in which New York-listed shipowner Navios Partners is involved.

Frangou is optimistic about bulkers and tankers, but she spoke with more caution about the container ship sector. She noted that liner operators have locked in long contracts for tonnage, a positive sign for the market’s future. But she said the reality is that the West is coming out of Covid-19, which pushed consumer demand towards goods and away from services. “What we see is that we are moving from goods to services,” she said, explaining that the change will inevitably have an impact on the container ship sector. With liner operators making record profits during the pandemic, Navios Partners’ customers have strong balance sheets. With its boxship fleet tied up on time charters to major container carriers, that translates to strong credit quality. But there is another market inefficiency that could help the container ship sector, among others. Frangou said a shift from just-in-time to just-in-case manufacturing leads to duplication of production. “That creates more inefficiency, again, more tonne-miles,” she said. The trend is a reaction to the supply chain crisis.

Just-in-time manufacturing led to more efficient supply chains until it suddenly stopped working because of congestion across logistics networks and shortages. The companies that had inventory were the ones that managed the crisis best, according to Frangou. “That is something that the board of every company would like to have: just-in-case manufacturing. It is basically insurance,” she said. In dry bulk and tankers, the company is monitoring economic concerns, as financial pundits warn of risks of a global recession. But the direction of the global economy is not the main driver of strong rates in bulk commodities shipping, she said. “The inefficiency at this time is driving the market.” And the positive tonne-mile impact of the market inefficiencies driven by the geopolitical situation appears here to stay. In tankers, the world’s emergence from the pandemic, as it drives travel, is providing a strong outlook for demand. For dry bulk, in which her Navios Maritime Holdings also has a significant fleet, sanctions against Russia have disrupted what had been more efficient trade flows. “Right now, everything has to go further, come from further away and go further away, so the whole thing is very inefficient.”

Members of the National Oilseed Processors Association (NOPA) posted the highest soybean crush volume on record for May at 171m bushels, up 4.6% YoY. As a result, the USDA is forecasting a 20% YoY fall in US soybean ending stocks for 2021/2022, at 5.6 MMT. This was driven by strong crush margins in May, which reached $2.35/bu. While margins have now returned to normal levels of around 70 cents on lower soybean oil and meal prices, the long-term outlook remains positive for US soy processors. There is growing US demand for soybean oil as a feedstock for biofuel. At a Federal level, the EPA recently raised total biofuel blending requirements for 2022 by 10.7% YoY to 20.63 billion gallons. Soy processors are working to increase capacity, with around 14 new plants reportedly set to come online in the next few years and three existing plants announcing increases to crushing capacity. With domestic crushing demand set to rise and margins still healthy, this could drive lower soybean exports out of the US going forward provided no sharp increase in prices takes place. The US has exported 41.3 MMT of soybeans so far in the 2021/22 marketing year (September-August), down 16.3% YoY. Panamax volumes saw the largest decline in this period, falling 19.6% YoY to 31.4 MMT. Supramax volumes comparatively only fell by 1% to 8.7 MMT.

Germany, the Netherlands and Austria have announced plans to restart several coal power plants, as Europe prepares for a potential winter without Russian natural gas. Germany will temporarily bring back up to 10.6GW of idled coal, oil, and lignite capacity. The Netherlands has removed a 35% cap on coal-fired power plant utilization. Meanwhile, Austrian authorities will convert the Mellach gas-fired power plant back to coal, although it will initially remain on standby. European governments have been stockpiling coal since Russia’s invasion of Ukraine. The EU imported 11.6 MMT of coal in May, up 56.8% YoY. Imports have remained strong so far this month, at 7.6 MMT. If shipments continue at current rates, June imports will total 12.6 MMT. Shipments of Russian coal to EU ports have already started to slow, ahead of a full EU ban from 10 August. Imports have averaged 66,700 tons per day so far in June. This is down 46% on last month’s average and 17% lower YoY. Securing additional coal will be challenging. The US has been unable to maintain the three-fold YoY increase in shipments to the EU seen in April due to limited mining and rail capacity. EU imports of US coal fell 32.7% MoM in May to 20.9 MMT. Australia, which has accounted for 23% of EU June imports, is currently experiencing domestic power shortages. Last week, the New South Wales government invoked powers that will allow it to ban coal exports if the situation worsens.

The most recently released data as of June 19th shows the daily coal burn rate at China’s six major coastal power plants has come in at 779,000 tons.  This is 3% stronger than was seen one week prior, marks the highest daily burn seen since February, and is up year-on-year by 3%. 

As we have been highlighting, the ongoing strengthening in coal burn remains very much in line with various coronavirus restrictions recently being eased across China.  Warm weather also continues to contribute to the strong burn.  Overall, the burn rate remains most important to us for further gauging China’s current industrial production and its near-term industrial production prospects (rather than simply gauging what to expect for coal imports).  It remains encouraging that year-on-year growth has been maintained recently. 

New tool providing quarterly assessments across all financial metrics suggests peak has passed for smaller bulk carrier prices, and canny owners are already divesting, writes Will Fray from MSI. The dynamics that have supported earnings for smaller geared dry bulk vessels over the past 12-18 months have also supported asset values. Whilst newbuild contract and scrap prices have broadly moved in tandem across bulker benchmarks since the start of 2021, second-hand prices for smaller ships have far outperformed their larger counterparts.

Data from MSI’s latest quarterly Dry Bulk Report indicates that five-year-old handysize ships have more than doubled in value since January 2021, whilst capesize values are up by only 56%. The relative changes to asset values since the freight market peak in October are remarkable. Capesize secondhand prices have broadly followed conventional wisdom since then: the positive impact of rising newbuild prices (up 3.3% since October) and scrap (up 10%) have been offset by lower earnings (down 11%). It is no surprise to see five-year-old capesize prices only 1% higher over this period. Whilst handysize newbuild and scrap prices have increased by similar amounts, since the start of the year (3.6% and 10%), and time charter rates are also about 10% lower, the values of secondhand handysize assets are sharply higher. A five-year-old handysize vessel is now worth 17% more than in October. Is this an upwards correction to overly negative valuations in October, or are handysize vessels now overvalued?

A new feature on MSI HORIZON, providing more detailed financial analysis for shipping investments, helps to assess this question. MSI’s new Project Financial Analysis tool is a financial model providing quarterly projections for P&L, balance sheet, cash flow, loan schedule, depreciation, and resulting financial metrics to evaluate investment return. It can be used for single vessels, or portfolios of ships across multiple sectors with each vessel subject to its own financing, chartering and operating cost conditions. The outcome is revealing. Despite fundamental analysis showing that smaller vessels will be subject to better market conditions (stronger growth in minor bulks and grains trades, a smaller orderbook, a larger proportion of the fleet at scrapping age), and will have relatively stronger earnings potential when compared with history, the unlevered IRR for a purchase of a five year old handysize bulker today and sold in five years as a 10 year old, is 4.4%, lower than a capesize (5.9%). This analysis suggests that handysize bulkers are now relatively overvalued when compared with capesize ships. But with investment returns of under 6% per year, it could be argued that both are overvalued in absolute terms if shipping investments are to be judged against a typical cost of equity of around 8%. This would go against the prevailing optimism amongst dry bulk owners, particularly for smaller tonnage. But recent activity by some owners, with Taylor Maritime, Pacific Basin, and Swire (China Navigation) all selling vessels, suggests MSI is not alone in adopting a cautious outlook.

Perhaps the most prominent proponent of the investment case for smaller bulkers has been Taylor Maritime Investments (TMI), a UK-listed dry bulk entity spun out of the Hong Kong owner of the same name. Taylor Maritime’s IPO in May-2021 allowed the company to purchase 23 vessels at the time of inception; the fleet has since increased to 28 ships (27 handysize and one supramax) and the share price has risen by over 50% over the past year. Interestingly, TMI’s fleet would have been larger but for selling four vessels since the end of December (generating IRRs in excess of 100%). They have also sold another vessel in a sale-and-leaseback deal and have meanwhile committed a larger share of its fleet on longer term time charter contracts. They have also diversified their exposure, by taking a stake in Grindrod shipping, which has a significant portfolio of supramax and ultramax ships. This would suggest that the company has changed tack this year and now feels that there is more value in selling handysize assets in the current market whilst also taking a cautious view over longer term earnings. TMI are not alone amongst well-known names selling handysize tonnage. Pacific Basin has also sold four assets this year, whilst Hong Kong compatriot Swire (China Navigation) has sold six.

Nonetheless, given the sharp rise in prices, the balance of view sits more on the optimistic side for investing in dry bulk ships, particularly smaller tonnage. But MSI’s outlook is more closely aligned with those selling assets, illustrated by the relatively low returns highlighted above. MSI’s view is driven primarily by the expected fall in bulker earnings in 2023/24, but the earnings cycle is closely aligned with the newbuilding and scrap price cycles, both of which are expected to deteriorate over the next two years. Modern asset values next year will be supported by the newbuild replacement cost, which will only witness a marginal reduction – five-year-old handysize prices will fall by just 15% year-on-year next year, compared with a 26% fall for 20-year-old values, for example. But in MSI’s base case, all drivers for asset prices weaken sharply in 2024. A minor deviation between the direction of earnings and newbuilding/scrap prices in 2025 means that MSI’s forecast for secondhand asset values in that year is broadly flat, before an uptick in 2026.

The physical market for capesize bulk carriers saw a slight upturn on Monday, but this was not enough to support the aggressive sell-off seen in the paper market. The words “What a day” seemed to be on everybody’s lips as the market ended on Monday, even after the physical index showed a slight increase on the back of rising rates in the Atlantic. The capesize 5TC — the weighted average of spot rates across five key benchmark routes — was assessed $362 higher at $25,138 per day. “Both basins looked stable to start the week. The key routes Brazil to Qingdao and west Australia to Qingdao had a minimal decline, but the lower bunker value helped to maintain the relevant time charter routes in positive territory,” the Baltic Exchange said in its daily market report on Monday. An extra $500 was added to the assessment of transatlantic round voyages from the Continent, which were put at $30,444 per day. Transpacific round voyages from China/Japan were assessed $218 higher on Monday at $22,636 per day.

Rumors circulated in the physical market that big commodity firms like miners BHP and Rio Tinto had fixed capesizes for fronthaul voyages at very good rates. However, only one new voyage fixture came to light on Monday. Brokers reported that Chinese operator Zhejiang Shipping fixed a vessel relet by Capesize Chartering Ltd for an iron-ore trip from Western Australia to China. Bocimar’s 175,219-dwt Mineral Brussel (built 2011) was fixed at $13.25 per tonne for loading dates commencing 5 July. This is 50 cents more than the last reported fixture for similar loading dates.

The reasons behind the selloff were unclear. Some said they simply didn’t know what had inspired such vigorous selling; some said it was just a continuation of the downward monthly trend. Others attributed the steady stream to bearish data from commodity markets. “Oil prices tanked on Friday, [iron] ore prices tanked this morning, and there is still a big premium in the Q3/Q4 and a great deal of speculative length in the cals [calendar year contracts],” one trader told TradeWinds on Monday. “Prices were vulnerable to a drop and sellers had plenty of excuses today to dump length.” Paper for the calendar year 2024 closed at $19,524 per day on Monday, $1,796 lower than on Friday. Likewise, the 2024 contract settled $1,725 lower on Monday at $17,464 per day. But it was the July contract that was worst affected by the selling activity. Paper for next month lost $3,657 on Monday, settling at $28,136 per day. Indicative rates for the balance of 2022 remain at healthy levels. Going by the Baltic Exchange’s forward curve, September looks to be the strongest month during the rest of this year. Contracts settled at $33,036 per day on Monday, although this is $3,178 below where they were on Friday.

Monday’s commodities selloff wiped a combined $11.1bn off the market capitalization of Australia’s three biggest miners Rio Tinto, BHP, and Fortescue Metals. The plunge followed deepening concerns over the easing of demand from China and fears of a global recession. Output from Chinese steel mills has been cut as margins fall, blast furnaces are idled, and inventories rise, which has impacted China’s demand for iron ore. Domestic consumption of steel has also remained subdued. Futures contracts for iron ore fell by almost 10% on the Dalian Commodity Exchange on Monday. Iron ore prices have come under pressure as more production capacity comes online in the face of this weak demand. The first ore was delivered from Rio Tinto’s Gudai-Darri iron ore mine in the Pilbara region of Australia last week. The mine has production capacity of 43 MMT per year and is the miner’s first greenfield mine to open in over a decade. Prices for other metals have fallen on the back of worries that big hikes in interest rates by the US Federal Reserve and other central banks could tip the global economy into a recession.

South Africa’s Richards Bay Coal Terminal (RBCT) has seen a 40% increase in coal heading for Europe in the first five months of this year. Data from Reuters shows that by the end of May, RBCT exported 3.24 MMT of coal to Europe, which is more than the entire amount it sent there in 2021. The increase is a direct result of wide-ranging sanctions on Russia. Russian coal imports will be banned in the European Union from the second week of August, leaving European buyers to search for coal further afield.

This will change the trading patterns of bulkers that supply coal to Europe, where short haul runs from the Black Sea currently predominate. The trade is about to go long-haul, which is good for dry bulk as tonne-mile ratios increase. Russia supplies 70% of the thermal coal that is imported by EU countries. Poland and Germany are the biggest buyers. The trade is estimated to be worth €4bn ($4.2bn) per year. However, efforts to reduce greenhouse gas emissions put Russian coal imports on a steep decline even before the invasion of Ukraine. Data from Eurostat, the EU’s official statistics office, show that Russian coal imports dropped by 50% between 2014 and 2020. Imports fell from 56.1 MMT to 44.2 MMT between 2019 and 2020 alone.

The EU’s ban was first mooted at the beginning of April, which has led to importers accelerating deliveries that have already been contracted. But, anticipating future problems with Russian stock, they also began sourcing alternative supplies the moment Russia’s tanks crossed the Ukrainian border. South Africa is a logical alternative. About 90% of the coal Russia sells to the EU is thermal coal used in power stations, and South Africa has thermal coal in abundance. The problem is that the country’s exports are hampered by limitations at the RBCT, which suffers from capacity restraints caused by the poor condition of the state-run railway line that links the terminal with coal mines in the country’s hinterland. It has little wriggle room left to boost export capacity. Europe is, therefore, actively looking for alternative coal sources from South America and the US. Colombia is a likely substitute source, said Ralph Leszczynski, Banchero Costa’s Singapore-based head of research. “Colombia was squeezed out years ago because it became uncompetitive due to falling demand in Europe. It has capacity it can build up. The same applies to the US. Both were dependent on Europe for their coal exports. It doesn’t make sense for them to export to Asia,” he told TradeWinds.

The EU is not the only region that has blocked Russian coal. Japan, which imports on average 10 MMT of the commodity, has announced a similar ban. South Korean power companies are also reported to be shunning Russian coal. Russian coal is shipped to Asian buyers from Vladivostok. Leszczynski believes Japan will replace it with coal from Indonesia and Australia, a move he estimates will increase the tonne-mile ratio by 10 times. However, other shifts in the Russian coal trade could counter some of the long-haul gains. Russia’s coal industry has responded to the bans by flooding the market with cheap coal. China has emerged as a major buyer, doubling imports to 4.42 MMT between March and April, according to trade data from Refinitiv.

CNN recently reported that Russia had overtaken Australia as China’s second-biggest supplier since last year and now accounts for 19% of its coal imports. The impact of China’s increased imports of Russian coal is being felt elsewhere. China was the third-biggest importer of coal from South Africa in 2021, at 6.09 MMT, but has not received any this year, according to Reuters. The bulk of the Russian coal heading to China is being shipped by rail, thus cutting bulk carriers out of the equation. Leszczynski said that overall, the Russian coal bans will be positive for the dry bulk sector provided substitute volumes are shipped. However, he cautioned that if there is a significant increase in coal prices, it could lead to demand destruction. High energy prices, he said, could send Europe into recession, which would lead to reduced energy demand.

After a strong start to the Brazilian soybean season, exports at 43 MMT for the first 5 months are underperforming last year’s record output. Obviously a much lower harvest figure (now standing at 126 MMT according to the USDA) is principally responsible though clearly Chinese demand is not as strong this year as lockdowns have clearly impacted meat consumption, leading to sharply falling pork prices and thus reducing farmers ability to purchase high quality international soybeans at this

years elevated prices.

Indeed, soybean prices in Brazil hit a record 694/ton in April but have generally remained high all year, currently averaging $638/ton for the year to date. This is over $200 (+46%) higher than the 2011-20 price average. By contrast China’s crushing mills have been hit at times by negative crush margins. All these factors have led to Chinese imports declining by 4 MMT (-12% y-o-y) to 28.7 MMT. As China typically imports around 70% of Brazil’s exports (2022: 67%), perhaps it is fortuitous that production

has fallen thus maintaining high FOB prices for other buyers. For the crop year of 2022/23, the outlook is at present far more positive with most forecasters predicting production of soybeans bouncing back to close to 150 MMT.

Despite the ever-present weather-related risks that threaten this strong forecast, the most apparent issue for production yields could be the lack of available fertilizer, and the cost of energy. 85% of Brazil’s fertilizers are sourced from abroad and clearly China’s export ban will limit supply from the east though volumes of fertilizer imported from Brazil’s other main supplier, Russia,

appear to be largely unaffected by conflict in the Black Sea.

Average spot rates capesize and panamax bulkers finished Friday with a one-week gain, as positive sentiment reversed a downward trend. The Baltic Exchange’s Capesize 5TC, which averages spot rates across five key routes, improved 26% over the past week to reach $24,776 per day on Friday. The spot rate for C10 roundtrip route between China and Australia gained 28% over the same period to land at $22,418 per day on Friday. The freight rate on the C5 route, covering the laden leg from Western Australia to Qingdao, China, posted a healthy 8% gain to $13.49 per tonne.

“It was turbulent seas this week as global markets buffeted the capesize sector,” Baltic Exchange analysts wrote in their weekly wrap up on dry bulk shipping. “Miners were heard to be bidding up strongly amidst a tightening tonnage supply at the end of the week on West Australia to China C5.” They said the capesize market may keep improving, but it is hard to know for certain because global markets remain unsettled. “Yet coming into the second part of the year, history tells us cargo flows will be increasing while downside from $20,000 on the 5TC never seems to last too long under owner resistance,” the analysts wrote. On Friday, Australian miner BHP took one capesize bulker and rival Rio Tinto hired two more at rates between $13.35 and $13.55 per tonne for journeys from Dampier in Western Australia to China, according to Baltic Exchange data. That was somewhat higher than Rio Tinto paid hired two unnamed capesizes a week earlier on the same route at $12.25 and $12.45 per tonne.

The Panamax 5TC also made good gains over the week, rising 8.9% to $25,757 per day on Friday, the exchange’s data showed. “The panamax market encountered a steady rise this week following recent weeks of falls,” the analysts said. “A floor was seemingly found on Tuesday, primarily in the Atlantic. However, Asia soon followed suit with improved demand found in both basins.” They noted that the Atlantic basin was mostly “grain centric” as panamaxes shipped grain from the Americas to Europe. Meanwhile, Indonesian coal demand kept these ships in the Pacific basin “with plentiful activity”, they said. “And, with an improving EC [east coast] South America market, the south was well supported.” Among the deals, the 82,033-dwt Oceania Graeca (built 2019) was fixed at $25,000 per day to sail from China’s Port of Changjiangkou via East Coast Australia to India after loading from 20 to 22 June.

This week we investigate the supply side of the smaller sizes and our expectations going forward.

Freight returns on the geared vessels have performed well in 2022, commanding a premium to the larger Capesizes and Panamaxes for most of the year. The smaller vessels ship a more-diverse range of commodities, thus a decline in trade of one is less impactful, compared to iron ore on the Capesizes for example. This sets the basis for a more positive outlook for these vessels, hence why ordering in the Ultramax segment has been more robust. In last week’s Big Picture, in which we covered the Capes and Panamaxes primarily, we are seeing ordering in the geared segments also being affected by higher prices. However, given their overage fleet sizes, we have increased our scrapping outlook for both the Supramaxes and Handies.

Of the 227 bulk carriers that have been ordered so far in 2022, 87 have been Ultramaxes, grabbing a 38.3% share of total dry bulk contracting across this period. In Q1, 56 vessels in this sector were ordered, the highest level since Q2 2014. Handysize ordering fell to a 1-year low in Q1, at just 16 vessels, the lowest since Q4 2020. Since then, 24 vessels have been ordered. For this reason, we don’t envisage a meaningful increase in Handysize ordering any time soon.

Supra/Ultramax

Supply in the Supramax sector has increased by 1.3% in 2022 on net additions of 50 vessels, with nearly all the growth coming from the Ultramax design.  The Ultramax fleet has grown by 3.3% in 2022, the highest level across all vessel categories and showing few signs of slowing down. With the 58k dwt Supramax fleet now aging considerably, almost all renewals have come in the form of an Ultramax. With 21% of the 40-70k dwt segment 20 years or older, we expect this renewal process to continue at these levels out to 2026. As we mentioned above, this is the main factor driving our increased expectation for scrapping on the 58k dwt vessels. As Ultramaxes continue to be ordered in the face of several restraints in the newbuilding market, we have kept our expectations for ordering flat from our previous round of forecasting. Therefore, the marginal reduction in supply growth is derived from increased removals, predominantly in the back end of our forecast. Like the larger ships, we have reduced our expectations for scrapping for this year given the relatively firm market environment at present but raised them for the years to follow. As a result, we forecast removals in the Supramax sector at 820k dwt in 2022, declining marginally from 2021. For these reasons, we see the Supramax sector growing at a compound annual growth rate (CAGR) of 2.5% out to 2026.

The Handies

Handysize fleet growth has been on a constant, but low, trajectory in recent years and given current ordering trends, we expect this to continue. In 2022, the Handy fleet has increased by 0.8% amounting to net additions of 19 ships. While fleet renewal is in full swing in the Supramax sector, the same can’t be said for the Handy fleet. Despite the overage fleet making up 22% of total Handy supply, contracting is still showing no signs of any material increase. Though Handysize rates have been firm in the past 12 months, these vessels, even when comparing to an Ultramax, are difficult to trade. Subsequently, owners looking for more exposure to the geared vessels are more likely to opt for the Ultramaxes, which don’t charge much of a premium. We expect removals to decline in 2022 to little over 200k dwt. Consistent with our thesis on the other sizes, we also see increased scrapping of the overage fleet post-2022 as IMO regulations take effect. Overall, we now forecast Handy supply to grow at a CAGR of 1.1% over the next 5 years, the lowest of all the dry bulk segments.

Newbuilding prices

Current prices for an Ultramax or Large Handysize, which see the bulk of the ordering in each sector, have risen in tandem with the larger vessels given the elevated steel and energy costs facing shipbuilders. Like the Capes and Panamaxes, yard availability is limited, driving hesitancy towards paying firm prices for less-prompt deliveries when market conditions are less certain. With 2024 essentially covered, most offers are now coming for 2025 delivery and beyond. In Japan, most Ultramax availability now lies in the second half of 2025. The greater relative price increase for an Ultramax in Japan versus China has simply been driven by a large difference in inquiry from owners to yards in both countries. Japanese-built Ultramaxes are now being quoted for $39m, the highest level on record. Although higher prices have discouraged buyers in other sectors, the recent ordering activity for these vessels suggests this has yet to be a deterrent on the Ultramaxes. Finally, while inflation mixed with heavy competition for yard slots has driven shipbuilders to raise offers for dry bulk vessels, we also believe central bank tightening is set to play a role in ordering going forward. With the US federal reserve raising interest rates by 75 bps on Wednesday, and many other countries following suit, capital is becoming more expensive. Along with the reasons outlined above, this may act as a further disincentive in contracting going forward.

Oslo-listed Western Bulk is predicting record earnings from an “exceptionally good start to the year.” The Norwegian supramax operator said net profit in the first six months should come in between $37m and $40m.The Christen Sveaas-backed company has benefited from strategic initiatives and an agile approach to market volatility, it added. The forecast is a “significant outperformance” of earlier expectations and should lead to the best profit in its 40-year history, Western Bulk said.

Since April, the supramax market has been hovering around $27,000 to $30,000 per day, with somewhat lower market volatility than the previous quarters, as expected, the company revealed. “However, the volatility in market rates between various geographic regions has stayed high and offered several trading opportunities,” Western Bulk said. The company explained that, historically, the market has been higher in the second half of the year, offering increased opportunities on the back of seasonality. This impact is expected to be limited this year due to lower economic growth and uncertainty related to Chinese demand, as well as increased protectionism, with countries like India imposing export restrictions to curb inflation, it believes.

Consequently, Western Bulk is anticipating “somewhat lower” results in the second six months, when compared to January to June. In March, the company said it was expecting a record first-quarter result in markets that had stayed volatile. Western Bulk predicted earnings of between $18m and $20m to 31 March. The operator explained it had used “continued high market volatility, both in respect of total market levels and relative levels between the Pacific and Atlantic basins” to boost profit.