Golden Ocean’s capesize bulker, Channel Navigator. Image courtesy Golden Ocean
OSLO, March 23 (Reuters) – Dry bulk shipping charter rates remain well below break even levels, pushing vessel scrapping to record highs, though some market improvement is expected in the second quarter, Herman Billung, the CEO of shipping firm Golden Ocean said.
Dayrates have plunged as China’s slowdown reduced its iron ore imports while the market is flooded with brand new vessels entering the market, sending the Baltic Dry index to an all-time-low of around 500 points in February from around 1,600 points a year ago.
“It’s pretty brutal what’s happening in the market right now, but in many ways it’s the best medicine for the industry,” Billung told Reuters in a telephone interview on Monday.
Oslo-listed Golden Ocean, part of shipping tycoon John Fredriksen’s business empire, has repeatedly called on rivals to increase scrapping and order fewer new ship to restore the market’s balance.
“Scrapping has been at record levels so far this year with 34 capesize vessels already taken out of the market. That’s more than for the whole year of 2014 and we are only three months in.”
“And if you look at the order book for 2017 it’s empty. No one will order ships in the market we have now, said Billung. “I think we will see the market improving somewhat when we move further in to the second quarter”, he added.
Golden Ocean has all of its capesize ships and around 80 percent of its smaller Panamax vessels trading in the spot market.
Even though dayrates for the capesize vessels have fallen to around $4,000 per day, below break even levels of around $13,000 to 14,000 a day, Billung said Golden Ocean had the cash to survive.
“We will manage. If you have as much cash as we do then you will make it through in a good way,” said Billung.
Golden Ocean agreed last year to merge with rival Knightsbridge Shipping Limited. (Reporting by Joachim Dagenborg; Editing by Balazs Koranyi)
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