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The second half of the year has provided some cheer for the dry bulk market, with all ships in the spot market averaging earnings above the break-even point, though not high enough to make up for losses made during the first part of the year.
After the sharp and sudden shock of the pandemic, the economic recovery has begun and it is clear that it will be drawn out and uneven, both geographically and by sector. Though China has returned to growth, most other countries are lagging behind.
The outlook is poor for dry bulk, as the negative demand shock and overcapacity come together to send rates to multi-year lows, even a return to work in China is not enough to support the market.
The sulphur regulation from the International Maritime Organization (IMO) that came into force on 1 January 2020 took the centre stage in the shipping industry at outset of the new decade. Four months on, the spotlights have turned to the coronavirus and the OPEC+ oil price war.
US seaborne exports to China of the goods which China has imposed tariffs on since the start of the trade war fell by 37.6% in the first 11 months of 2019 (11M 2019) compared to the same period of 2017, the last full year unaffected by the trade war.
2018 has been absolutely horrible for the crude oil tankers with freight rates and the fleet utilisation rate falling to a record low level.
The trade war adds painful uncertainty for the shipping industry, as it distorts the free flow of goods, changes trade lanes and makes it difficult for ship operators and owners to position their ships efficiently in the market.