Lower net fleet growth will likely improve the rate environment



Fleet growth

In 2015, the net fleet growth is forecast to be below 4%. Navios Maritime Holdings’ (NM) management commented that this will lead to favorable supply-demand dynamics. The forecast is lower than last year. It’s expected to be lower than the demand growth. This will result in an improved rate environment going forward—particularly in the second half of 2015.

The orderbook is expected to decline in the next three years. Also, the recent trend to convert newbuilds dry bulk orders to tankers will likely reduce the orderbook more. The PowerShares DB Oil Fund ETF (DBO) tracks the performance of crude oil.

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In 2014, 48.1 million DWT (deadweight tonnage) was delivered. The non-delivery rate stood at 36%. It was mainly led by non-deliveries of 45% and 40% for Panamax and Supermax vessels, respectively. So far, through January 2015, non-deliveries remained high at 38%. A preliminary 7.6 billion DWT was delivered against an expected 12.2 million DWT.

Other shipping companies, Diana Shipping (DSX), DryShips (DRYS), Safe Bulkers (SB), and Navios Maritime Partners LP (NMM) recorded fleets of 40, 49, 32, and 32, respectively, in latest reported quarter.

Fleet scrapping

Due to the continued low market scrapping rates for older and less fuel efficient vessels, scrapping surged in 2015. Through February 2015, 4.2 million DWT were scrapped. The current rate environment should encourage scrapping of all of the vessels. About 11% of the fleet is over 20 years old. This provides about 81 million DWT of scrapping potential. Demolition prices seem to depend on overall steel prices. The prices don’t depend on the supply of vessels. The prices are expected to remain high.


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