by Richard Scott, Bulk Shipping Analysis
Signs of reduced commodity import volumes are clearly visible among dry bulk importing countries. But there are also signs of strengthening activity elsewhere, some of which have been unexpectedly vigorous this year. Consequently overall global seaborne dry bulk trade still appears to be growing slowly, and this pattern could continue.
The advantages provided by economic progress around the world are limited. One beneficial influence is China’s economic growth which, although evidently in a longer term slowing trend, has not decelerated much during 2016 so far. Estimates for third quarter GDP in China revealed 6.7% growth, similar to previous quarters. However, there are worries about high credit expansion and debt, with potential for having unfavourable effects.
Recent forecasts by the Australian Government Department of Industry, Innovation and Science illustrate the subdued outlook for steam coal. Global trade, including overland movements but mostly seaborne, is expected to decrease marginally by 1% to 1,043mt (million tonnes) in 2016, after a 7% fall last year, followed by a flat total next year.
According to this forecast, lower steam coal imports into the European Union are likely to be one of the biggest negative influences in the current year, falling by 18mt (9%) to 176mt. The picture in Asia is mixed, resulting in an overall minimal 5mt or 1% increase to 714mt. China’s imports may be higher, but India and South Korea are expected to see declines. However predictions vary, and table 1, based on various sources, indicates a possible marginal regional decrease.
Subdued steel production in raw materials importing countries recently has affected iron ore import demand adversely. In China, renewed acceleration of the imports trend reflects lower output from domestic iron ore mines. But elsewhere, steel industry downturns have weakened consumption of raw materials.
World Steel Association figures show that steel production
growth among key iron ore importers is very limited. In Japan, crude steel output was marginally (by less than 1%) lower in the first nine months of 2016, at 78.4mt. South Korea’s output was 2% lower at 51.0mt, while in the European Union a large 5% reduction to 121.3mt was seen. China’s volume saw a minimal increase of well under 1%, to 603.8mt.
Prospects for global wheat and coarse grains trade, in the current 2016/17 crop year ending June, still suggest a lower volume than seen in the previous twelve months. The International Grains Council is forecasting a decrease of 7mt or 2%, to 337mt, mainly caused by lower imports into China and Europe.
In the EU, a sharply reduced domestic grain harvest was recorded this year. Wheat production, in particular was down by more than one-tenth due to adverse weather. Nevertheless, grain supplies seem to be adequate and imports are still expected to decline, falling by 12% to 18.8mt. In China excessive corn stocks are restraining foreign grain purchases, which are estimated to be down by 34%, at 15.7mt.
A large part of minor bulks trade is comprised of agricultural and related commodities. This group’s total seaborne trade is estimated to exceed 350mt annually, and seems to be continuing to grow. In the current year there signs pointing to increased movements of sugar and oilseed meal, especially soyameal.
BULK CARRIER FLEET
Among bulk carrier size groups, the Capesize sector (ships exceeding 100,000 deadweight capacity) is growing only very slowly, as shown in table 2. While there are still great uncertainties about the outcome for this year as a whole, fleet capacity looks set to rise by around 1%. A large volume of newbuilding deliveries from shipyards probably will be mostly offset by heavy scrapping of old or uneconomic vessels during 2016, similar to the pattern of changes seen in the previous twelve months.