After last year’s weakening, some indications are pointing to commodity import demand strengthening during 2023. Additional volumes of minerals and agricultural commodities moving could assist a fairly broadly-based recovery in world seaborne dry bulk trade to become established.
Restrained optimism about the trajectory of the world economy, and especially about countries importing dry bulks, is evident. The pace of future activity is still unclear, amid continuing uncertainty surrounding inflation, interest rates and effects on business and consumer spending. Yet the OECD organization last month raised its GDP forecast for the world economy by 0.4 percentage points to 2.6% in 2023 (after 3.2% in 2022), while cautioning that “improvement in the outlook is still fragile”.
GRAIN & SOYA
A contrasting perspective persists between the negative outlook for wheat and coarse grains trade, and the positive prospects for soyabeans and meal trade. But the global changes in volume envisaged could prove almost offsetting, resulting in the grain and soya total remaining quite flat in the 2022/23 trade year ending third quarter 2023.
The positive element is shown in table 1, revealing that world trade in soyabeans and meal is expected to grow by 3% in 2022/23, based on US Department of Agriculture estimates published last month. The total is forecast at 230mt (million tonnes), about 7mt above the previous year’s reduced level. Two-thirds of this upturn consists of an envisaged recovery in China’s imports, which could increase by 4.5mt or 5% to just over 96mt, assisted by stronger demand for livestock feed ingredients.
COAL
Prospects for seaborne coal trade during this year as a whole remain somewhat unclear, amid ongoing changes in the global energy market resulting from the war in Ukraine. However, some forecasters suggest that limited growth in both steam and coking coal segments is predictable in 2023.
An analysis published by the World Bank at the end of last month highlighted how global demand for, and production of, coal reached all-time highs in 2022. Growth in consumption of 10% in India and 5% in Europe occurred. The global expansion reflected electricity generation switching away from natural gas, and weaker power output from other energy sources. Nevertheless, it is not clear whether and to what extent this trend will continue to benefit coal trade.
IRON ORE
Signs of growth among iron ore importing countries around the world currently are not prominent features. Steel production performances in recent months confirm the adverse influences still affecting raw materials consumption and import demand.
One exception is China, where steel output rose by 6% in the first two months of 2023, reaching 169mt. Together with other tentative evidence, this suggests that a pick up may have begun following the economy’s reopening after the ending of covid controls. If the indication proves realistic — affecting China’s three-quarters share of world iron ore trade — and is accompanied by more support from other importers such as Japan, South Korea and Europe, ore trade could be reinforced.
MINOR BULKS
Several ‘industrial’ minor bulk commodity trades dependent on manufacturing and construction activity are likely to derive advantages during 2023 from any sustained economic revival unfolding in China and elsewhere. Higher global volumes of steel products, bauxite and alumina and a number of minor ores and minerals trades have been suggested.
BULK CARRIER FLEET
Panamax (including Kamsarmax) 70–99,999 deadweight tonnes vessels comprise a quarter of the world bulk carrier fleet, carrying a wide variety of cargoes on numerous trade routes. As shown by table 2, capacity growth remained robust last year at almost 4%. In the current year higher newbuilding deliveries are expected, but potential for increased scrapping to restrain further capacity expansion is apparent, and new international maritime regulations also may have a moderating effect.