by Richard Scott, Bulk Shipping Analysis
Signs pointing to sharply slowing growth of global seaborne dry bulk trade have become more prominent. Although commodity import demand in many countries is still expanding, much of the increased volume is being offset by reductions elsewhere. Weakness in China’s imports, particularly coal, is a key negative aspect.
An updated forecast from the IMF in early July provided limited encouragement. A gradual pick up in economic activity among the advanced economies — mainly USA, Europe, Japan and Korea — is expected, to 2.1% GDP growth in 2015 (from 1.8% last year). But emerging economies including China, as a group, are predicted to see a further slowing to 4.2% this year (from 4.6% in the previous twelve months).
Forecasts for coal trade have been downgraded as the full extent of adverse events has unfolded. However, not all importers are likely to see no growth or lower volumes. India is a focus of attention, reflecting clear indications suggesting a continued strong upwards trend in both steam and coking coal imports.
Recently revised forecasts by the Australian Government Dept of Industry and Science showed global metallurgical coal trade (coking coal plus steam coal used in the steel industry), most of which is seaborne, falling by 3% in 2015. From 310mt (million tonnes) last year, the total is predicted to decline to 301mt this year. A steep 31% fall in China’s metcoal imports, to 45mt in 2015, is the main cause envisaged, more than offsetting a robust rise in India.
Steel production evolution in the first half of this year emphasizes slacker support for raw materials import demand in many countries. In China, the world’s dominant iron ore importer, an expectation of large additional purchases from foreign suppliers — to replace uncompetitive low-quality ore produced in domestic mines — has not been fulfilled in the past six months.
Crude steel production figures compiled by the World Steel Association show China’s total decreasing by a marginal 1%
in the first half of 2015, compared with last year’s same period, to 410mt. Other reductions included a 5% fall in Japan, to 52.6mt, and similar 5% falls in South Korea and Taiwan, to 34.5mt and 10.6mt respectively. By contrast, EU output was 1% higher at 88.1mt while India saw a 4% increase to 45mt.
Following a remarkable period of expansion, world trade in wheat plus corn and other coarse grains seems set to decrease slightly over the period ahead. During the past two crop years, 2013/14 and 2014/15 which has just ended, trade grew cumulatively by almost one-fifth. In 2015/16 now beginning, a 3% reduction to 312mt is indicated by updated (at the end of July) International Grains Council estimates.
Growth over the past two years resulted mainly from greatly increased imports into China and advances in some other Asian countries. These rises were accompanied by enlarged purchases by countries in the Middle East and North Africa. Tentative signs of changes in the twelve months ahead point to reduced Middle East volumes, and a number of other smaller reductions around the world.
Among key minor bulks, global seaborne trade in bauxite/alumina could strengthen in 2015 according to some estimates. After declining steeply last year to around 105mt, positive indications have emerged but there is still uncertainty about China’s imports, which totalled almost 42mt in 2014.
BULK CARRIER FLEET
Additional bulk carrier capacity entering the world fleet this year may exceed the previous annual total, as shown by table 2.
All size groups except Panamax may see larger deadweight volumes added. However, a high proportion of this year’s extra new capacity is likely to be offset by scrapping of old tonnage, resulting in a noticeable fleet growth deceleration.