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Steel's Downturn Sinks the Shipping Industry
02/22/2016 - Misery loves company, and so the steel sector isn't the only one feeling pain. The shipping industry is under just as much pressure, owing to falling demand, low prices and a glut of capacity.
According to Bloomberg columnist Chris Bryant, iron ore and coal are among the dry bulk shipping industry's most important cargoes.
But steelmakers are producing less, and as a result, approximately one-fourth of the dry bulk shipping industry's total capacity is going unused, he said. And ship owners aren't keen on scrapping vessels: about 80 percent of the dry bulk fleet has been at sea for less than 15 years, Bryant wrote.
According to The Wall Street Journal, it's now cheaper to move commodities by sea than it has been in the past 31 years. More than a dozen small operators have filed for bankruptcy, it said, and at least 20 closely held companies have gone out of business.
“We view the market to be in pure survival mode for the coming year,” Clarksons Platou Securities said in a recent report, according to The Journal.
According to the Reuters news service, the dry bulk shipping downturn began in 2008, after the onset of the financial crisis, and has worsened significantly this year as the Chinese economy has slowed.
"The Chinese economy, which is the main driver of dry bulk, is way below expectations," Symeon Pariaros, chief administrative officer of Greek shipping firm Euroseas, told Reuters. "Only companies with very strong balance sheets will get through this storm."
But steelmakers are producing less, and as a result, approximately one-fourth of the dry bulk shipping industry's total capacity is going unused, he said. And ship owners aren't keen on scrapping vessels: about 80 percent of the dry bulk fleet has been at sea for less than 15 years, Bryant wrote.
According to The Wall Street Journal, it's now cheaper to move commodities by sea than it has been in the past 31 years. More than a dozen small operators have filed for bankruptcy, it said, and at least 20 closely held companies have gone out of business.
“We view the market to be in pure survival mode for the coming year,” Clarksons Platou Securities said in a recent report, according to The Journal.
According to the Reuters news service, the dry bulk shipping downturn began in 2008, after the onset of the financial crisis, and has worsened significantly this year as the Chinese economy has slowed.
"The Chinese economy, which is the main driver of dry bulk, is way below expectations," Symeon Pariaros, chief administrative officer of Greek shipping firm Euroseas, told Reuters. "Only companies with very strong balance sheets will get through this storm."
