“The dry bulk shipping market could very well be on the cusp of a sustained, cyclical recovery,” the New York-based investment bank said in a quarterly report e-mailed today.
Fleet growth at 5 percent to 6 percent this year amid increased production of iron ore, a steel-making raw material, “will likely be insufficient to absorb the incremental demand” by miners in the second half of 2013, Jefferies said. The outlook for the sector is “increasingly attractive” with global dry bulk trade estimated to grow by at least 6 percent in 2013, Jefferies said.
Hire costs for the global fleet of 1,513 Capesize bulk carriers, the largest ships used to carry iron ore and coal, averaged $7,680 a day last year compared with $106,068 in 2008, according to the Baltic Exchange, the London-based assessor of freight costs. Rates will increase to $12,000 this year and $20,000 in 2014, Jefferies said.
Still, the dry-bulk market remains “challenging” amid a slowdown in trade growth in recent months with Capesize single- voyage hires declining to 82 in February from 125 in October, the bank said.