by Richard Scott, Bulk Shipping Analysis
Optimism about import demand for raw materials
and other industrial bulk commodities in many
countries is still evident. But there are greater
doubts about how strong this upwards trend will prove in
the immediate future. World seaborne dry bulk trade
growth may be beginning a slacker interlude, before
resuming a more vigorous performance through 2011.
The latest OECD update suggests that the global recovery,
from last year’s recession, is now experiencing a deceleration
that is “somewhat more pronounced than previously
anticipated.” In the G7 major economies group (USA,
Canada, Japan and the main European countries) GDP growth
in second half 2010 is expected to reach only about 1.5%
annualized. It is not yet clear how temporary this loss of
momentum will be.
There is a continuing absence of signs pointing to an upturn
in wheat and coarse grains trade during the twelve months
ahead. A fairly flat volume seems quite likely. Reduced
Middle East and Asian imports are expected to be a
prominent restraining element. However, in the closely
related soyabeans and meal sector, prospects are looking
more favourable.
Recent US Dept of Agriculture estimates, summarized in
table 1, show world soya trade in the new 2010/11
marketing year starting this month increasing by 6%. After a
rapid 9% rise in the previous twelve months, to 140.3mt
(million tonnes), the total is forecast to expand by 8.2mt,
reaching 148.6mt. Much of the growth in the past year
reflected China’s extra requirements, and in the year ahead
additional Chinese beans imports will remain a key feature.
During the first half of 2010, a sustained steel production
rebound in Europe, Japan and South Korea boosted raw
materials import demand. Since then indications have
emerged implying a flattening production trend in many
countries, over the remainder of this year and into 2011.
Steel output figures for key iron ore importing countries in
recent months provide tentative evidence of a levelling-off
beginning. In Japan, crude steel production in August 2010
was lower than in the two previous months, at 8.9mt,
reflecting reduced domestic and export demand. The third
quarter total may be well below the second quarter’s
28.0mt. In Europe there is evidence of steel consumption
slackness, and China’s upwards trend is moderating.
Coking coal usage has already benefited greatly from steel
industry strength in this year’s first half. Annual 2010 world
import demand for coking coal probably will be much higher
than last year’s total. Some elements of the steam coal
sector are expanding robustly as well.
New forecasts by Abare suggest that world metallurgical
coal trade (coking coal plus other grades used in
steelmaking) could expand by 30mt or 14% in 2010, from
211mt in 2009, to 241mt. Steam coal trade is expected to
grow at a slower rate of about 3%, rising by 20mt from
725mt last year to 745mt this year. Further robust expansion
in both sectors is foreseen in 2011.
Among minor dry bulk commodity trades, steel products is a
large component. The recovery in industrial activity around
the world over the past twelve months, especially in
manufacturing, has prompted a pick up in many countries’
steel imports. Higher foreign purchases by many Asian
countries were a feature of the first six months of 2010,
assisting strong exports from Japan and China.
Fleet growth within the Panamax bulk carrier sector seems
set to accelerate rapidly, as shown by table 2. After
increasing by over 5% in 2009, expansion this year could be
at least double, exceeding 10%. Newbuilding deliveries are
likely to be much higher, reflecting the huge orderbook.
Scrapping has been low this year so far, but may revive over
the months ahead, although the annual total could remain
below last year’s figure.