October 17 - The multipurpose shipping fleet could be greeted with a rising market share and recovery in freight rates in 2018, according to Drewry's latest Multipurpose Shipping Market Review and Forecaster report.
The authors of the report cite recovering demand for multipurpose shipping combined with improved market conditions for competing sectors the reasons for the forecast.
Drewry suggests that although China's plans to curb steel production in an attempt to clean-up the air pollution in its cities may slow steel exports in the short term, the longer term outlook is positive for the multipurpose and heavy lift sector.
As the clean-up campaign begins to cut approximately 50 million tons (45 million tonnes) of steel production, Drewry expects that Chinese exports will become less competitive for their South East Asian customers compared to the Middle East or Turkey, resulting in a shift in trade volumes.
Meanwhile, there are also signs that the longer term health of the competing sectors is improving, says Drewry.
Freight rate forecasts for both the container and handybulk carrier sectors are showing upward movement in 2017 and 2018. According to Drewry, this has already led one container line to announce that it is less interested in project cargo than previously, due to the extra time needed to stow this type of cargo.
Although there is still a significant level of suplus tonnage in the multipurpose fleet, the report states that the majority of newbuilding deliveries over the last five years have been heavy lift capable.
Drewry says that this modern fleet of project carriers is well placed to take advantage of an upturn in this sector.
"The improvements in many other key drivers for this market mean we remain optimistic about its future," says Susan Oatway, lead analyst for multipurpose shipping at Drewry.
"The expectations for global GDP, coupled with those for global PMI [Purchasing Managers' Index] and the rising oil price, are likely to lead to improved investment and therefore increased demand for breakbulk and project cargo.