LONDON, Feb 23 (Reuters) – Bumper soybean crops in Brazil and unsold grain stocks in the United States will boost dry bulk shipping rates as buyers including China restock after supply problems last year, major cargo operators said.
The dry bulk shipping market has been hit in recent months by sluggish activity, partly driven by the COVID lockdowns in China, one of the world’s biggest generators of seaborne trade in commodities including grain, coal and iron ore.
Grain supplies were also affected by the war in Ukraine for part of last year until a United Nations-backed corridor was established, though exports have slowed of late.
Shipping participants say they are already seeing early cargo chartering ahead of the start of the South American export season and expect it to accelerate from April onwards.
Grains make up 50% of the cargo carried by London-listed Taylor Maritime Investments, which is already seeing more trade from the US Gulf.
“We saw shipments leaving Mississippi a month in advance, which we normally wouldn’t expect to see,” chief executive Edward Buttery told Reuters.
“I don’t expect a massive rate recovery this year, but I do expect a good recovery.”
Limited orders for dry bulk ships and the scrapping of smaller and older ships, especially used in the grain trade, and less energy efficient, are also expected to reduce ship availability this year.
“China’s grain stock levels are relatively low, so it’s not just the supply side of the equation, but the demand is there,” said Jan Dieleman, president of Cargill’s shipping division.
“We’re seeing a pretty interesting move coming up.”
New maritime environmental regulations introduced in 2023 are also expected to mean ships slow down to reduce emissions, further reducing ship availability.
“Trade route reorganization is already taking place and other exporting nations are filling the gap of lost Ukrainian supply,” Star Bulk Carriers CEO Petros Pappas said on a Feb. 17 earnings call.
“In addition, a record crop of Brazilian soybeans is currently being harvested, while the recovery of the Chinese economy should substantially increase demand (for soybeans).”
(Reporting by Jonathan Saul; Editing by Emelia Sithole-Matarise)
Source: (c) Copyright Thomson Reuters 2023.