As the 2016 dawns upon us, the shipping industry should brace itself for yet another challenging year, according to BIMCO, as hope for a bounce-back in 2016 fades away.
Despite this, the International Monetary Fund has forecast higher GDP growth rates for 2016 across the board.
The shipping industry can expect an uncertain and lower level of support from China, one of the most important drivers of shipping demand growth in recent times, as the country re-evaluates its future growth direction.
On the other hand, Europe and Japan, in particular, look like they might provide positive surprises in 2016. The European Central Bank and Bank of Japan are continuously seeking to boost their economies to bring on the sustainable recovery that everyone needs.
For the dry bulk sector in 2016, BIMCO expects the supply-side to grow by around 2% (2.6% in 2015E) – and that this will be helped by a new record level of scrapping. On the demand-side, growth is forecast to remain level. Challenging market conditions in China will be likely to affect the level of risk.
With respect to the tanker market, after the perfect storm a steadier year awaits both the crude oil tanker and oil product tanker markets.
The two sectors enjoyed an extraordinarily strong freight market throughout 2015, ignited by the drop in oil prices that began in mid-2014 and supported by a relatively low supply-side growth in 2015. It was the best year for all oil tankers since the market crashed in late 2008.
However, going forward, the significant building of oil stocks in 2015 may slow down tanker demand growth somewhat in 2016.
BIMCO expects Iran’s return to the crude oil export market in 2016 to disrupt current trade patterns.
“As Iran rebuilds its market share, it will seek to take the place of neighbouring and West African competitors in supplying European and Asian markets. Time will tell if this will also bring higher tanker demand, but BIMCO does not expect that to happen,” BIMCO said.
The multi-year slide in the crude oil tanker fleet growth was reversed in 2015. BIMCO expects the crude oil segment to see a fleet growth of around 4.5% in 2016 (2.3% in 2015E). As the demand-side growth is unlikely to reach the same high level, downward pressure on freight rates will follow.