Gloomy forecast for bulker orders

Shipping lines will most likely be unable to raise rates above break-even levels in the next two or three years, analysts at the Credit Suisse Group have said. The Baltic Dry Index has fallen drastically as the global recession saps demand for shipments of iron ore, grain and other commodities. At the same time, shipyards are delivering new vessels ordered during a boom that ended last year.

To restore the balance in the global fleet, 70%of new orders need to be cancelled and all vessels over 25 years old have to be scrapped, Credit Suisse recommended. Dry-bulk demand is likely to drop 3.4% this year before rising 4.2% next year, the bank added.

Asian bulk lines will likely post an average return on equity of -6.5% this year, with “absolute losses” narrowing “moderately” in 2010, Credit Suisse said. The bank previously had a “market weight” rating on the industry. The world?s largest operator of dry-bulk ships, China?s COSCO Holdings, and South Korean giant STX Pan Ocean would both most likely make losses in 2009 and 2010, analysts said.