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Orders for new ships were free-flowing before it became clear a few years back that the global economy was in its worst condition since the 1930s. So, as shipping demand dropped, a lot of new ships came on line. Global dry bulk shipping capacity grew 88 percent from the end of 2007 through 2012, according to a recent report by Jefferies, a U.S. securities firm.
Shipping analysts have at least a glint of optimism. This year more shipping capacity is coming on line, but not at the breakneck pace of the past five years. That suggests the ship glut is abating.
“After years of a difficult dry bulk market, we are now getting closer to a turning point,” analyst Eirik Haavaldsen wrote in a recent report subtitled “Get Ready to Invest.”
Freight rates should remain challenging in the short term. But Haavaldsen, who’s with Oslo-based Pareto Securities, noted that dry bulk demand should exceed vessel supply later in 2013, the first time that’s happened in at least five years.
Meanwhile, China’s growth rate is expected to stay strong, and that country is the world’s biggest magnet for iron ore and coal. “From a long-term view, the world economic outlook for these two commodities [iron and coal] is relatively good, ” said IHS’s Sorgenfrei.
Mike Hughlett • 612-673-7003