Shipping Markets for Dry Bulk Carriers and Container Ships at Historic Lows

「In the container shipping business, cargo demand was supported by seasonal factors, but freight rates remained under downward pressure against a backdrop of increased vessel supply from newbuilding deliveries. As a result, equity-method affiliate OCEAN NETWORK EXPRESS PTE. LTD. posted lower profit than in the previous fiscal year.」

「Thereafter, growth in cargo demand slowed and increased vessel supply from newbuilding deliveries combined to intensify downward pressure on freight rates. As a result, equity-method affiliate OCEAN NETWORK EXPRESS PTE. LTD. posted a substantial year-on-year decline in profit.」

「Cape size market conditions were generally firm in the first half, supported by steady iron ore shipments from Western Australia and Brazil and bauxite shipments from West Africa. In the second half, they entered a temporary slump as vessel supply and demand eased when Brazilian iron ore shipments stalled during the rainy season from December to February, but began to recover from March as shipment volumes increased. Panamax and smaller-vessel market conditions were firm in the first half, supported by steady coal and grain shipments and strong cargo movement of steel products from China. In the second half, the market remained sluggish due to the end of congestion in the Panama Canal and higher vessel utilization, weak domestic demand in China, and a deterioration in supply-demand balances between regions. From the start of the new year, however, market conditions entered a recovery trend, accompanied by strong South American grain shipments.」

「Cape size market conditions remained firm after a temporary decline in the first half of August caused by stalled shipments during West Africa’s rainy season, supported by strong iron ore shipments from Western Australia and Brazil and the recovery of bauxite shipments from West Africa from September onward. Limited newbuilding deliveries also supported the market. Panamax market conditions fell across all regions as the peak season for shipments from South America ended in July and vessel supply and demand began to ease. However, Supramax and smaller-vessel market conditions remained firm, supported by steady cargo movement of minor bulk commodities, including minerals such as salt and limestone and wood products, as well as steel products.」

「Cape size market conditions trended higher as vessel supply and demand improved, particularly in the Atlantic, with Brazilian iron ore shipments increasing steadily and bauxite shipments from West Africa recovering after the rainy season. Panamax, Handymax and smaller-vessel market conditions were sluggish in the first half as pessimism about China’s economy weighed on sentiment despite firm coal and grain shipments. In the second half, however, they began to recover as vessel supply and demand tightened due to the effects of low water levels in the Panama Canal and heightened geopolitical risk in the Middle East.」

「Cape size market conditions remained firm on strong iron ore shipments from Australia and Brazil. Although they fell temporarily at the end of August, they entered a recovery trend on the end of the rainy season and coal demand from China and India. Panamax, Handymax and smaller-vessel market conditions recovered temporarily from August as coal and grain markets remained relatively firm and vessel supply and demand improved somewhat. However, pessimism about the timing of China’s economic recovery weighed on sentiment, limiting upside.」

「Panamax, Handymax and smaller-vessel market conditions generally trended lower as South American grain shipments remained sluggish, cargo movement for cement and other commodities was limited, and sentiment deteriorated amid concerns over delayed economic recovery in China, as with Cape size. / At equity-method affiliate OCEAN NETWORK EXPRESS PTE. LTD., cargo demand declined as high interest rates and inflation stalled consumer spending in Europe and the United States, while spot and time-charter freight rates fell, particularly on North American and European routes.」

「Although market conditions softened, earnings increased year on year due to the stable performance of long-term contracts, contributions from the open-hatch and multipurpose vessel businesses, and the reversal by a consolidated subsidiary of part of the allowance for doubtful accounts previously recorded for loans to equity-method affiliate GEARBULK HOLDING AG, following an improvement in the affiliate’s financial condition.」

「Cape size market conditions peaked in mid-May against a backdrop of strong demand for coal bound for India, but fell sharply by the end of August as vessel supply and demand eased due to higher vessel utilization following the easing or removal of COVID-19 restrictions, in addition to uncertainty over the global economic outlook.」

「Vessel supply and demand eased as vessel utilization increased due to uncertainty over the global economic outlook and the easing or removal of COVID-19 quarantine measures in various countries, negatively affecting dry bulk market conditions. Cape size fell sharply from its mid-May peak through the end of August. Supply and demand tightened temporarily in September due to typhoons and other bad weather, but the recovery was limited.」

「Cape size and Panamax market conditions started at low levels as bad weather delayed the recovery of Brazilian iron ore shipments and lockdowns in Shanghai, China, affected the market. In May, however, both vessel types rose to the ¥30,000-per-day range on a sharp increase in demand for coal bound for India. Thereafter, vessel supply and demand eased as coal transportation demand paused, and both vessel types remained around ¥20,000 per day.」

「Cape size market conditions subsequently entered a correction phase and were somewhat sluggish from the start of the year as shipments from Brazil slowed with the onset of the rainy season. Panamax market conditions were affected by Indonesia’s coal export restrictions at the start of the year and disruption related to the Russia-Ukraine situation, but remained generally firm for the full year, supported by winter coal demand and transportation demand for South American grain and other cargoes.」

「Cape size market conditions rose through early October as vessel supply and demand tightened, driven by firm demand for raw material transportation from major resource companies and steelmakers amid higher iron ore and steel prices, as well as prolonged congestion due to China’s COVID-19 border controls, typhoons and other factors. They subsequently entered a correction phase as congestion eased and Chinese demand for steel products and crude steel production moderated, but remained firm overall. Panamax market conditions trended higher through mid-October as vessel supply and demand tightened due to stronger regulations related to COVID-19 in countries including China, as with Cape size. They softened thereafter but remained firm overall.」

「Cape size market conditions trended higher as vessel supply and demand tightened amid strong shipments of iron ore from Australia and Brazil, with little weather disruption, while congestion increased due to China’s border controls related to COVID-19 and typhoons. Panamax market conditions also remained at high levels: although grain and coal shipments were firm, vessel supply and demand tightened as countries including China strengthened their COVID-19 restrictions.」

「Cape size market conditions in the first quarter increased as demand for raw material transportation rose on strong shipments by major resource companies and steelmakers amid higher iron ore and steel prices, reaching a daily high above $40,000 in early May, the first time since 2013. They subsequently entered a correction phase, but turned higher again from early June against a backdrop of strong markets for small and medium-sized vessels and Australian iron ore shipments. Panamax market conditions in the first quarter rose from mid-April on firm transportation demand for grain and coal bound for China, and continued to strengthen on demand for grain shipped from the Atlantic region to the Far East and other factors.」

「Cape size market conditions improved in the first half, with the combined effect of recovering Chinese demand and rising freight futures, and remained generally firm. In the second half, they rose again in early autumn as strong Chinese demand for raw materials was supplemented by recovering demand in Japan, South Korea and Europe, but then trended lower.」

「Cape size market conditions rose again ahead of China’s National Day holiday as strong Chinese demand for raw materials was supplemented by recovering demand in Japan, South Korea and Europe, but paused in early October and then gradually trended lower. From mid-December, however, congestion at Chinese discharge ports increased again, resulting in a moderate recovery. Panamax market conditions rose into the summer, supported by strong demand to transport South American grain, then softened temporarily as South American grain shipments slowed and demand for coal shipments to China declined. From September onward, however, they remained firm, underpinned by demand for grain from North America and elsewhere.」

「The Capesize market deteriorated year on year at the beginning of the period as prolonged rainy conditions depressed Brazilian ore shipments and reduced steel sheet demand due to the novel coronavirus slowed iron ore cargo movements to Japan and Europe. From late May, it generally remained firm while alternating between improvement and correction, supported by increased Chinese demand and rising freight futures. The Panamax market also deteriorated year on year, but entered an upward trend from June on strong grain transportation demand, including from South America. Although coal transportation demand to China and India weakened in September, the market was supported by grain transportation demand from North America to China.」

「The Capesize market started around $6,000 per day, depressed by weak Brazilian ore shipments following the prolonged rainy season and slower iron ore cargo movements to Japan and Europe due to the impact of the novel coronavirus. From late May, however, the market surged on the combined effect of increased Chinese demand and rising freight futures, recovering to the $29,000s per day by the end of June.」

「From the beginning of the year, spot charters to China declined as the impact of the novel coronavirus coincided with the Chinese New Year, and the market remained weak.」

「The Capesize market recovered in the first half from the downturn caused by the collapse of a mining dam in Brazil and other factors, and rose partly due to the tightening effect on vessel supply and demand from an increase in the number of vessels undergoing dry-docking for scrubber installations. It subsequently maintained a certain degree of firmness against a backdrop of solid Chinese crude steel production and other factors, but declined from a peak in early September as shipments from Brazil slowed from November onward.」

「The Capesize market continued to recover from the downturn caused by the collapse of a mining dam in Brazil and other factors. It rose from July, supported by recovering cargo volumes and the tightening effect on vessel supply and demand from an increase in the number of vessels undergoing dry-docking for scrubber installations, and remained generally firm thereafter. The Panamax market had been declining in June, but rose from July on strong grain cargoes from South America and remained firm until peaking in September.」

「The Capesize market started weak, at around the mid-$3,000s per day, due to reduced shipments affected by the collapse of a mining dam in Brazil, but recovered at low levels from mid-April as ore procurement from Canada, South Africa and Western Australia increased as alternatives. After reports in June that mining groups in southern Brazil were expected to resume operations, the market recovered to the $19,000s per day by the end of June. The Panamax market gradually recovered in the first half of the first quarter, driven by grain cargoes from South America during the shipping season, but turned downward in June and remained generally around $10,000 per day during the first quarter.」

「The Capesize market remained firm in the first half, supported by strong iron ore shipments from Western Australia and Brazil, but fell sharply in the second half due to concerns over worsening vessel supply and demand conditions and reduced shipments following a freight train derailment in Australia in November 2018 and the collapse of a mining dam in Brazil in late January 2019.」

「The Capesize market rose at times during the first half as iron ore shipments from Western Australia and Brazil recovered, but weakened toward the end of the second quarter partly due to the impact of U.S.-China trade friction on market sentiment. In October, the second half of the fiscal year, it remained in the $17,000 to $18,000 per day range, supported by firm spot demand. In November, however, concerns over worsening vessel supply and demand conditions stemming from a freight train derailment in Australia led to panic selling, and the market fell sharply to the $8,000s per day. Spot demand returned from late November, and the market recovered. Despite a seasonal decline before the Christmas holidays, it remained generally in the $16,000s per day in December.」

「The Capesize market rose to the $24,000s per day from July through August as iron ore shipments from Brazil recovered, but subsequently weakened as market sentiment deteriorated over U.S.-China trade friction, remaining generally in the $17,000s per day in September. The Panamax market also experienced a temporary deterioration in market sentiment, but rose gradually on firm movements of major cargoes such as coal and grain from South America, remaining in the $13,000 to $14,000 per day range from mid-September onward.」

「The Panamax market weakened in April as cargo movements slowed due to concerns over China's restrictions on coal imports and U.S.-China trade friction, but rose from mid-May, tracking the upswing in the Capesize market and supported by firm movements of major cargoes.」

「Within the shipping market, the dry bulk market remained firm at levels substantially higher than in the previous period, as ore cargo movements strengthened and grain cargoes from the east coast of South America and coal, a major cargo, generally moved well. In the containership market, spot freight rates recovered on North American, European and South American routes against a backdrop of improved supply and demand conditions. Although some signs of recovery emerged as described above, momentum overall was weak and a full recovery was not achieved.」

「Within the shipping market, the dry bulk market remained firm as the decline before China's National Day holiday was limited, supported by strong demand for vessel capacity, recovering Brazilian iron ore prices, orders for grain cargoes from the U.S. Gulf and the east coast of South America, and solid winter coal demand in China. In the containership market, demand remained firm on North American and European routes, with Asia-origin cargo movements reaching a record high. However, increased supply, including from new entrants, limited the rise in spot freight rates.」

「Within the shipping market, the dry bulk market improved and remained firm despite the prolonged impact of a cyclone in eastern Australia and weak cargo volumes from Brazil, supported by solid coal demand and cargo movements from the east coast of South America. In the containership market, Asia-origin cargo movements on North American routes reached a record high, supported by the strong U.S. economy, while those on European routes also remained firm. However, increased supply from the deployment of large vessels limited the growth of spot freight rates during the summer peak season.」

「Within the shipping market, the dry bulk market remained firm despite the prolonged impact of a cyclone in eastern Australia and weak cargo volumes from Brazil, supported by solid coal demand and grain cargo movements from the east coast of South America. In the containership market, Asia-origin cargo movements on North American routes reached a record high, supported by the strong U.S. economy, while Asia-origin cargo movements on European routes also remained firm. In response to strong cargo demand, spot freight rates improved significantly year on year, and annual contract rates were generally renewed at higher levels.」

「The market is still in the process of recovering, but for containerships, annual contract rates, which fell sharply at the beginning of the period on many routes, particularly North American routes, remained a burden throughout the period.」

「Within the shipping market, the dry bulk market bottomed out against a backdrop of the impact of major shippers in Western Australia securing tonnage in concentrated volumes and increased coal imports into China. From autumn onward, it generally maintained a recovery trend, supported by firm iron ore shipments from Brazil and the start of the North American grain harvest, although some vessel types experienced sharp fluctuations. In the containership market, spot freight rates recovered on North American, European and South American routes against a backdrop of improved supply and demand conditions, but difficult conditions continued as annual contract rates, particularly on North American routes, fell sharply at the beginning of the period under the impact of the previous period's market downturn.」

「The dry bulk market improved against a backdrop of the impact of major shippers in Western Australia securing tonnage in concentrated volumes, firm iron ore shipments from Brazil and increased coal imports into China, but headroom remained limited and the market continued to face pressure. In the containership market, spot freight rates recovered on North American, European and South American routes against a backdrop of improved supply and demand conditions, but difficult conditions continued as annual contract rates, particularly on North American routes, fell sharply under the lingering impact of last year's market downturn.」

「The dry bulk market improved against a backdrop of the impact of major shippers in Western Australia securing tonnage in concentrated volumes, strong grain shipments from South America and firm coal demand, but remained weak as the surplus of vessel capacity was not fully eliminated. In the containership market, spot freight rates recovered on European and South American routes against a backdrop of improved supply and demand conditions, but difficult conditions continued as annual contract rates, particularly on North American routes, fell sharply under the lingering impact of last year's market downturn.」

「The dry bulk market and containership freight market remained at historically low levels, significantly affecting our performance.」