d’Amico sees strong recovery in the dry bulk throughout 2018
Shipbreaking and global economic growth will restore market stability, meanwhile, Rome-based group is completing its fleet restructuring plan in order to seize new opportunities
As foreseen by d'Amico group, the substantial increase in coal and iron ore trade, supported by the newly-revived Chinese economy, and the end of oversupply, fostered by latest shipbreaking boom, will consent the dry bulk market to target a strong and stable recovery thtoughout 2018.
The company, operating in the dry bulk sector through subsidiary d'Amico dry, that will shortly fulfil the restructuring of its bulk carriers fleet, currently encompassing – as stated in 2016 annual report – 29 owned units, 21 long-term and 10 short-term chartered in ships.
Firstly, the business relations with Chinese Yangfan yard - which, due to in-house troubles, didn't meet fixed deadlines and quality standards of 7 x 64,000 dwt Supramax ships commissioned by d'Amico in between 2013 and 2014 - has finally ended.
“Out of overall 7 ordered units, two were commissioned on behalf of third-parties and 5 on behalf of d'Amico, but the company refused to take delivery of the first 2 on-property units due to technical problems and an legal dispute is ongoing”, told Ship2Shore Cesare d’Amico, co-managing the group with his cousin Paolo.
Meanwhile, “all orders were cancelled without any penalty. Advance payments offset the amount due for the construction of 11 Handysize bulkers (39,000 dwt capacity), which we had previously ordered and are currently already operating”.
For the time being, no d'Amico's ship is being manufactured at Yangfan shipyard, while 4 newbuildings are being completed at Japan-based Oshima installation.
Namely, two (60,000 dwt) bulk carriers, to be delivered by the end of this year, and two Post Panamax carriers (87,000 dwt), to be received by 2018 second half.
“We particularly bet on these two units. They have an extremely appealing size, due to their high operational feasibility, and will definitely debut in perfect time, by the time freight rates will have reached a satisfactory trend”.
According to d'Amico, the dry bulk industry has finally started a strong and, apparently enduring recovery: “Freight rates are good, they returned to 5 digit figures and oversupply, which hurt this market for years, is seemingly over due to substantial shipbreaking activities. As already told, the only way to revive the market was a general economic recovery, which has finally come”, stated Rome-native shipowner, adding that “China launched a massive coal and iron ore import, ocean trade is constantly growing and we foresee a positive trend in grain handling. Traditional dry bulk trade will support freight rates”.
No oversupply threat: “Provided there won't be new, most unlikely, daily peaks, I see no risk of new excessive newbuildings' orders as occurred in past years, nor even further speculations”.
A proper rescheduling between spot and time charter commitments is required: “A large number of bulk carriers were operated by a pool directly managed by d'Amico group, also encompassing third parties' ships, luckily we didn't fix long-term rates in 2016. In current growing trend, this typology of contracts will grow”.
Regarding the ships which left the company to lower average fleet age: “Within the next couple of months we'll sell at least two or three further units, but we already sealed a convenient charter-back contract on one of them (as already occurred in the liquid bulk sector)”, concludes Cesare d’Amico, former vice-president and newly-appointed President of Standard P&I Club.