September 30 - Drewry analyst Susan Oatway has said that she is even more pessimistic than she was six months ago about the outlook for the heavy lift and multipurpose market over the next couple of years.
Speaking at the Breakbulk Americas exhibition in Houston, USA, Oatway cited declining steel and crude oil industries as factors impacting the multipurpose market, as well as low demolition levels and especially growing competition from other sectors.
She suggested that "demolitions have really tailed off" with Drewry expecting to see even less scrapping in 2016. If there are any demolitions, Oatway believes that they might increase in the mid-size multipurpose market, but not the specialised project carriers.
"We do not think demolition levels are sustainable - the market is at rock bottom," she stated. Drewry expects a conservative fleet growth of 2.8 percent per year in the project carrier market.
The World Trade Organization (WTO) also revised its growth rate for the dry bulk trade from 2.8 percent to 1.5 percent this week, but suggested a slight increase in its 2017 forecast - something that Oatway is not convinced about.
Oatway noted that "the multipurpose market share has plummeted in 2016" and Drewry expects it to "plateau at best" in 2017.
According to Drewry, the main reason for the market decline is competition. "The multipurpose market has fallen off a cliff again over the past six months and we expect further erosion before 2017," explained Oatway.
She continued: "2016 was a bad year for all sectors and the competing sectors' low market conditions have impacted the multipurpose market even more."
In Oatway's opinion, the supply-demand imbalance will see the market fall further in 2017, with the potential for "slight growth" in 2018.
"We were hoping for an upturn towards the end of 2017, but we have pushed this back to 2018 mainly because of the competing sectors."
Oatway added: "When container rates are almost at zero, it is very difficult for multipurpose operators to compete."
Despite her pessimism, Oatway did suggest some hope for a market recovery in 2018. "There are some pockets of growth. An expected oil price increase to USD55 per barrel will create optimism; there is potential spend in the Middle East and Africa; and there is a renewed interest in renewable energies - in particular the wind market in North America."