Pacific Basin Anticipates Minimal Orders for Dual-Fuel Methanol Bulker in 2024

Pacific Basin, a Hong Kong-based dry bulk shipping company, foresees limited orders for mid-size dry bulk vessels equipped with dual-fuel methanol technology in 2024. Despite the potential for dual-fuel vessels to operate using green methanol, these ships are expected to primarily rely on conventional fuel oil in the near future due to the restricted availability and high cost of sustainable methanol.

Pacific Basin has actively engaged in collaborations with Nihon Shipyard Co. and Mitsui & Co. to design efficient dual-fuel vessels capable of running on both fuel oil and eco-friendly methanol. However, the company remains cautious about investing in newbuildings due to the prevailing high prices in the newbuilding market. Despite these challenges, Pacific Basin maintains a positive outlook on the long-term prospects of the dry bulk shipping industry. The company is confident that robust supply-side fundamentals and the ongoing implementation of existing and forthcoming decarbonization regulations will underpin its growth.

To support its expansion and fleet renewal efforts, Pacific Basin has entered into long-term inward charter agreements for both Handysize and Ultramax vessels. In July, the company took delivery of one 39,650 deadweight tons (dwt) Handysize newbuilding under a long-term time charter. It expects to receive two additional 40,000 dwt Handysize newbuildings, both Japanese-built, in November and December 2023.

Furthermore, Pacific Basin has secured additional long-term charter agreements for four Japanese-built 40,000 dwt Handysize newbuildings equipped with scrubbers, slated for delivery in the first quarter of 2025.

The company has also arranged long-term time charters for a 64,000 dwt Ultramax newbuilding scheduled for delivery in 2024, along with two more 64,000 dwt Ultramax newbuildings set for delivery in 2025. Each of these time charters includes options to extend the charter agreement at a fixed rate, as well as the option to purchase the vessels at a fixed price, providing Pacific Basin with enhanced flexibility in managing its fleet.

Meanwhile, Pacific Basin has executed the sale of six vessels year to date, comprising five Handysize vessels and one Supramax vessel, all with an average age of 19 years.

With the recent sales and purchases, Pacific Basin's Core fleet now consists of 135 Handysize and Supramax vessels. When considering chartered vessels in the operating business, the company's total fleet comprises approximately 280 vessels in operation.

Pacific Basin anticipates that the dry bulk market will be bolstered by sustained demand for coal and grain shipments. Seasonal variations, evolving trade patterns, and global concerns related to food and energy security are projected to play pivotal roles in maintaining this demand throughout the year.

In addition to these factors, the growth of the iron ore market is expected to significantly contribute to the industry's prosperity. Increased investments in infrastructure, rising steel production, and the expansion of emerging market economies are anticipated to drive the demand for iron ore, further supporting the dry bulk shipping sector.