Expectations are that the present devastating conditions of the dry bulk shipping market will lead to the demolition of 30 million DWT from the total global fleet during this year, and according to reports 17 million of DWT have been sold for the purposes of demolition at the end of May, as estimated by BIMCO.

“Owners have really dug deep during 2015’s first five months all the while market conditions have kept demolition levels rather high,” BIMCO commented.

As of the moment the Capesize fleet is smaller than it was only half a year ago (since November). Handysize and Panamax development has been flat, while the Handymax/Supramax segment has demonstrated a steady growth as initial expectations indicated.

Six million have been successfully delivered, in spite of demolishing Handymax capacity levels of 1 million DWT. This is equal to a growth level in supply for that sub-segment in the amount of 2.9% as of now, according to the data displayed by BIMCO.

BIMCO’s expectations regarding 2015 are for a 3.8% supply growth level, which serves as a downward revision of the estimate given three months prior. The reason for that is the adjustment of expectations for 2015 demolition volumes.

The contracting side offers another positive development. So far this year there’s been a total of 35 new orders placed at global shipyards. 12 Handymaxes, 7 Panamaxes, 16 Handysizes and not a single Capesize have been included in the order book, according to which there are currently 1,750 vessels with a combined capacity level of 142,000,000 DWT. During the time period of 2013-2014 the number of ships contracted was sitting at the 1,981 mark.

When regarding outlook, BIMCO has stated that Indian coal imports might demonstrate a rise of 20 million tons. For a second straight year Chinese import levels are to go down by 30 million tons according to current expectations.

“Putting aside the market’s very bad sentiment, BIMCO’s expectations are for an increase in volume as the year progresses into its third quarter. Additional Brazilian iron ore and grain (coarse and wheat) coming into the market sector while the soya season abates should in overall contribute for stopping the market from going into reverse – if the volume contracts.”

“New orders of 160 million DWT accounted for the time period of 2013/2014 may only contribute for negative effects when demolition activity is unable to slash any records by an unprecedented margin. The industry has to adapt to the current situation in order to turn out a profit again, given how the demand growth regarding dry bulk seaborne transportation looks to weaken as well, maybe even establishing itself permanently as China changes its approach,” BIMCO elaborated.

The Council’s beliefs are that owners must not only cool down a bit on new orders for a certain period of time but also adopt a more sensitive counterbalanced approach when regarding demolition for several years and not merely for a couple of quarters.

BIMCO’s expectations for the coming months of June, July and August are for the market challenges to stick around.

“The demand side is at such a weak state currently, given China’s 40% reduction of coal import levels that it negates a large portion of the market’s positive aspects. We, however, see owners attempting to limit their respective fleet growth via the increasing of demolition volumes regarding obsolete tonnage,” BIMCO finally adds.