by Richard Scott, Bulk Shipping Analysis,
Recent news about import demand for commodities in various countries has not greatly changed the picture evolving in previous months. Signs of additional volumes are visible, but there are also adverse influences pointing to possible reductions, or just lack of growth. This view implies very limited prospects for any overall expansion of global seaborne dry bulk trade during 2016.
Reports about economic activity around the world have not yet indicated that a pick up is beginning or imminent. In the group of advanced economies (mainly USA, Europe, Japan and Korea) average GDP growth similar to last year’s slow rate of about 2% still seems to be the most likely outcome for this year. In China a continued slowdown from last year’s 6.9% is widely expected.
One aspect of trade for which the outlook is definitely positive is soya, included in the ‘grain’ category. Global soyabeans and meal movements are being supported by robust consumption trends, coupled with either insufficient or absent domestic output of beans in many of the consuming countries, resulting in rising imports.
The latest US Dept of Agriculture forecasts for the current 2015/16 marketing year ending September 2016 are summarized in table 1. Total world soya trade, most of which is seaborne, has been revised upwards again to 193mt (million tonnes), a 6% increase. Imports into China comprise over two-fifths of the total, and are forecast to grow by 5% to 82mt this year, accompanied by larger quantities into other Asian countries and elsewhere.
In the iron ore trade sector restraining elements are clearly visible. A number of major raw materials importing countries are facing difficulties in raising steel production, and in some cases probably will not be able to maintain output at last year’s level. However, relatively low international prices for iron ore could support purchases.
Steel production in the dominant iron ore importing country, China, seems especially vulnerable to downwards pressure, amid slowing activity in consuming industries. Chinese buyers may reduce last year’s 953mt annual iron ore imports in 2016, despite a firm start to the year. A more optimistic view suggests only a small increase, and a similar outlook is applicable to the other main importers, Europe, Japan and Korea.
Prospects for coal trade also suggest severely restricted scope for resumed global growth in volume this year. Many major importers, including Japan, Europe and China are experiencing unfavourable influences, mainly reflecting switching towards cleaner fuels or expanding use of renewable energy sources. Nevertheless, the outlook is not entirely negative.
Uncertainty surrounds India’s coal imports. During the past twelve months it became clear that earlier expectations of a sustained rapidly rising trend were no longer so plausible. An estimated 4% reduction to about 215mt was seen in 2015, amid rapid growth in production from India’s domestic coal mines. Conversely, a group of smaller Asian buyers — Malaysia, Philippines, Thailand and Vietnam — evidently increased imports by about 10% to well over 60mt last year, and further growth is likely.
Among minor bulk commodities, trade in steel products (coil, sheet, plate and many other types) has been prominent. Estimates of global seaborne movements in 2015 suggest that the total may have been about 5% higher at over 320mt. A key part of this enlargement was another big rise in sales by Chinese mills, which grew by 20% to 112mt. Whether these trends will be extended this year is unclear.
BULK CARRIER FLEET
In the Panamax (65–99,999dwt) bulk carrier size group fleet expansion decelerated last year to under 2%, as shown in table 2. A similar growth rate is estimated for this year, despite a possibility of higher newbuilding deliveries, because the pace of scrapping is also expected to gain momentum.