We have revised our demand outlook and with it our market balance. Our overall view of the market remains broadly unchanged from our last forecast — the recovery we have seen over the last 18 months will continue, with the cycle remaining positive over the next 3 – 4 years. However some of the changes we have made to our demand expectations, along with the evolving supply picture, mean that for some the path through the cycle will not quite as smooth as we were previously forecasting.

So far this year we count 401 vessels that have been delivered. We still see another 49 ships as scheduled to come, but if you add in a bit of slippage we are close to being done as far as supply growth is concerned for 2017, with two and a half months still to go. So with the near term supply picture looking settled, what of the longer term outlook?

$2.5trn is invested annually in infrastructure projects, creating the transportation, power, water, and communications systems on which the global economy depends. With its requirements for steel (and by association iron ore and coking coal), cement and timber, plus a number of other bulk materials, infrastructure investment is the biggest ultimate driver of dry bulk demand. With spending requirements set to grow to $3.3trn a year in the run up to 2030 this is good news for dry bulk, with the cement trades in particular looking like they will benefit.

In terms of metric tonne trade growth, which is essential for freight rate improvement when considered in conjunction with fleet growth, we believe 2018 will be the year of the grain

In August, India came within a hair’s breadth of becoming the world’s second biggest steel producing country, with output hitting a near record 8.5 million tonnes (mt), just 260 thousand tonnes less than Japan. Total 2017 steel production is forecast at 99mt, having doubled in the past decade, and is now set to triple by 2030. It may have been China’s steel output has been grabbing the headlines for the past few years, but its about time that it was India that was in the news.

With the Baltic Dry Index at close to a three-year high and rates on the Panamax and geared vessels moving up in support of the Capes, the market is sitting pretty for the time being. There are however a couple of events in China to be aware of as we as we head towards Q4 which could impact on the market over the rest of the year and beyond.

The use of the Very Large Ore Carriers (VLOCs) for Brazilian iron ore exports has always received a lot a attention. Vale’s strategy of commissioning its own fleet of dedicated ore carriers had some teething problems, but things are running more smoothly now. Since the start of the year over 100mt of iron ore loaded by Vale has been onto VLOCs, with the vessels accounting for nearly 340 voyages, 30% of total shipments and 48% of the total ore shipped.

As the European summer comes to an end those returning to work after a holiday are facing a very different market to the one they left behind. Capesize spot TC rates have doubled since mid-July, period rates are up and the paper market has pushed up strongly. What is going on, and why?

This week we highlight the key demand side developments and our utilisation forecasts for 2018 and beyond. Whilst the supply side is displaying some self-correction, the big question now is whether demand is playing ball?

We are now over halfway through the year and have updated our supply and demand model since our last review at the end of Q1 this year.

We look to 2018 and beyond with tempered optimism. Over a two-week, two-part review, we start by outlining our supply forecasts. Next week we detail our demand and utilisation expectations.