On October 14, 2011, Shanghai International Shipping Institute (SISI) released the Shipping Market Analysis Report: Q3 Review and Q4 Outlook. It was pointed out that, in the context of a slowdown in global economic growth, major economic indicators across the US, Europe and Asia showed general declines in Q3. The economic outlook was turned even gloomier by the weak asset-liability structure of governments, financial institutions and households, as well as the instability of major trading currencies. In general, the global economy slid into a downturn in Q3, with risks expected to rise. Without giving a promising performance in the peak season, the overall market showed a slow recovery in demand. Overcapacity, intensified competitions among ship companies and other factors had brought huge losses to ship owners.

The international container shipping market registered flat performance in cargo volume, failing to show a due rebound even in the peak season. According to CI-Online statistics, the world’s overall container capacity maintained a stable development and recorded 16.67 million TEUs as of September, basically the same level as in the previous quarter. The third quarter saw a general depression in freight rates of major lines, shrinking about 50% YoY. The trans-Pacific and Asia/Nordic freight rates remained sluggish, forming a sharp contrast to the good performance of African, South American and Atlantic couterparts. The international dry bulk market experienced a significant rise in the third quarter, with BDI closing at 1,927 points by September 27 after surging by 33.63% from last quarter. The shipping demands for iron ores, coals, grains and other major commodities continued to rise, accompanied by an obvious fall in newly delivered large vessels. By the end of August, the overall shipping capacity reached 580 million dwt, ascending by 3.0% as compared with the end of the previous quarter. In the third quarter, as opposed to a slower rise in global oil demands, domestic needs for crude oil boomed. However, the demands for refined oil allowed not optimism. BDTI showed a gentle downward trend and BCTI a recession in sprit of a promising start. The V-turn of coastal dry bulk market in Q3 indicated boosted demands for coals and ores as well as a restored steel market.

Looking into the fourth quarter of 2011, under the continuous influence of European and the U.S. debt crises, the Europe and the U.S. will expect an increased risk of economic recession. According to the latest U.S. employment data and the downgrade of the U.S. debt, the recovery of U.S. economic environment will be hardly to see. With high inflationary pressures on emerging economies represented by China, India and Brazil, it will be hard for global trade to achieve a rapid growth. By the end of 2011, instead of ushering in an upturn, the market will still stroll at the bottom. In the fourth quarter, affected by insufficient demand, high oil prices, excess capacity and other factors, liner companies will face even severer situation and remain in debt. In the fourth quarter, the attempt of liner companies to begin a new round of capacity contraction may only lead to a slower decline in capacity, but won’t stop freight rates from further declining. As for international dry bulk market, based on the steady growth in capacity delivery and the bleak economic outlook of major ore consumer countries, it is estimated that the capacity rebound in the third quarter won’t last long and the rise in freight rates will still meet huge resistances in the forth quarter. Though to a limited degree, the uptrend of BDI is expected to continue in the fourth quarter, as shored up mainly by Capesize and BSIY. As a result, BDI may rise to about 2,150 points. Oil prices will generally remain at a high level, as weighted down by the tight supply of crude oil resulted from the unrest in the Middle East and North Africa and the supply reduction in Libya, as well as the impact of continuous recession of US dollar after the implementation of the QE2 program. However, affected by huge seasonal oil consumption in Northern Hemisphere in winter, oil demand is expected to present a stable performance in the fourth quarter. It is estimated that the freight rates of VLCC and Suezmax will rise slightly while that of Aframax decline somewhat due to the continuous delivery of capacity. Looking into the fourth quarter, based on the complementation of coal inventory by thermal power enterprises in September and October for the coming winter, the coastal dry bulk shipping market will continue to maintain the upward trend at a earlier time, followed by a seasonal decline, before ushering in a wave of rising at the end of the quarter.