For the dry bulk shipping market, 2013 finally ushered in signs of recovery as has been longly awaited. While the BDI began the year at only 698 points, by the end of the year it had risen to a much more robust 2277 points. Capesize rates, not surprisingly, ended the year back atop the vessel classes with capesize rates ending the year at $38,999/day. This marks a far cry from the start of the year, which saw capesize rates average only $4,864/day. Rates for the other three dry bulk vessel classes all found significant support as well. Panamax rates ended the year at $14,556/day, while they began the year at $5,426/day. Supramax rates ended the year at $15,195/day, while they began the year at $7,702/day. Handysize rates ended the year at $11,500/day, while the began they year at $6,603/day.

Dry bulk chartering rates were able to increase significantly this year, by an average of 226%, due to a considerable decline in newbuilding deliveries. Approximately 250 handysize vessels were delivered this year, slightly below the 289 handysize vessels delivered in 2012. Approximately 260 handymax vessels were delivered this year, moderately less than the 303 handymax vessels delivered inn 2012. Approximately 285 panamax vessels were delivered this year, well below the 370 panamax vessels delivered in 2012. Approximately 106 capesize vessels were delivered this year, well below the 210 capesize vessels delivered in 2012. In particular, capesize deliveries were very low this year and in fact marked the lowest amount of capesize vessels delivered since 2008. This is the main reason why capesize rates have been able to recover this year and rise to a very firm level.

For 2014, the orderbook for dry bulk vessels remains well below the peak delivery volumes seen in 2011 and 2012. Because of this, prospects for dry bulk dry rates in 2014 remain promising. However, a large amount of panamax vessels are still expected to be delivered. The 2014 orderbook for panamax vessels stands at approximately 225 vessels, while the orderbook for capesize vessels stands at only approximately 90 vessels. The orderbook for handymax vessels stands at approximately 100 vessels, and the orderbook for handysize vessels stands at approximately 120 vessels. With capesize deliveries expected to again be the lowest out of all four of the dry bulk vessel classes, prospects for capesize rates are most promising for 2014. Panamax rates are least promising, however, due the relatively large amount of panamax vessels that will again be delivered in 2014. Overall, though, rates throughout the dry bulk market are likely to set to end 2014 much higher than they begin the year.

While there is good reason to remain bullish for the dry bulk market for 2014 and particularly for capesize rates for March and afterwards (as Chinese steel production normally rises by a very large amount every March and then traditionally remains at robust levels), many questions remain for the beginning of next year. First and foremost is what degree of reform will take place in the Chinese economy. It has been surprising to some that Chinese lending in November rose 24% on a month-on-month basis and 20% on a year-on-year basis. Bank lending could be reigned in next year which would slow the growth of Chinese industrial production and demand for commodity imports by a small amount. However, Chinese economic growth is set to remain very strong next year. Chinese steel production and iron ore imports are both set to continue to set new records.

Also of a small concern for the near term, though, is that Chinese steel stockpiles and Chinese iron ore port stockpiles remain moderately above last year's levels. Stockpiles of flat and construction steel products in China currently total approximately 13.3 million tons, which is 1.6 million tons (14%) more than was stockpiled a year ago. In addition, 86.4 million tons of iron ore is now stockpiled at Chinese ports, which is 12.6 million tons (17%) more than was stockpiled a year ago. As a result, it is possible that demand for imported iron ore cargoes will start the year off low, which would put pressure on capesize rates. Steel production in China also normally stays low through the end of February. However, as the months progress, much greater demand for imported iron ore cargoes is likely to surface in the market and will likely help capesize rates rise even higher. A large seasonal increase in overall dry bulk cargo demand also traditionally occurs every year, as dry bulk cargo volume normally grows and peaks by the end of every year. 2014 is very likely to see dry bulk rates climb throughout the latter months, and end 2014 at very high levels.