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)
(c) 2015 Thomson Reuters, All Rights Reserved
Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.
Join the 105,913 members that receive our newsletter.
Have a news tip? Let us know.
ROME (Reuters) – An Italian judge on Friday cleared three migrant sea rescue charities that had been accused of abetting irregular immigration in complicity with human traffickers, throwing out a case opened...
(Bloomberg) — The closure of one of the East Coast’s busiest ports after the collapse of Baltimore’s Francis Scott Key Bridge has so far not led to broad price increases,...
(Bloomberg) — An Iranian ship that’s been linked to Houthi attacks in the Red Sea is returning home, removing a prominent asset in the area as the Islamic Republic braces...
Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.
Sign Up
Maritime and offshore news trusted by our 105,913 members delivered daily straight to your inbox.
Essential news coupled with the finest maritime content sourced from across the globe.
Sign Up
Join The Club
