Dry bulk shipping. Capes of no hope?

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The report focuses around:

• The imbalance of Capesize ships on order, the inflated demand expectations around iron ore
• The Chinese market and economy
• Long term implications and risks around the sector

The order book for Capesize vessels is at c. 40% of the current fleet. New vessels have been ordered on the assumption that demand for iron ore will continue to grow rapidly, largely driven by China. However, growth will be much lower in the future - China has significantly over-invested in recent years, leading to excess capacity across a range of fixed assets. Current levels of investment are so high, that even the government’s ambitious infrastructure plans can be met with no additional input growth. Other emerging markets are too small to replace China as engines of demand. The increasing fleet sizes of the major iron ore miners will exacerbate the effect on the Capesize market.