Coal Trade Holding Up

In recent weeks it has become clearer that commodity import demand around the world is well supported. Consequently solid world seaborne trade growth during 2024 as a whole seems to be evolving, and some positive signs for next year are evident.

 

A modestly firm underpinning of global economic activity is envisaged in the latest (mid-October) assessment of prospects by the International Monetary Fund. World growth of gross domestic product is expected to remain “stable yet underwhelming” through 2025 at 3.2% annually (after 3.3% in 2023). The task of bringing inflation under control “has largely been won”. This background will assist dry bulk trade over the year or more ahead.

 

Earlier this year it appeared that world seaborne coal trade could see a weaker trend unfold during 2024 following last year’s brisk expansion. A downturn seemed especially likely if China’s 2023 imports surge was reversed. As there has been no sign yet of that decline occurring, and weakness elsewhere among importers has proved limited, the current year’s trade volume may be stable or higher.

 

But the outlook for coal trade next year and later is still negative. Amid the energy transition towards renewable and other cleaner energy sources, fossil fuels will be affected by downwards pressures. A new report by the International Energy Agency published last month emphasized that “coal demand is projected to fall in the years ahead”, although the precise timing and pace of decline are uncertain. The pattern of import requirements probably will be similar.

 

Forecasts for global imports of iron ore suggest that an unchanged or higher volume in 2024 is likely, followed possibly by this trend extending into 2025. A recent report by Australian Government analysts estimated an unchanged 1,619mt (million tonnes) total this year (including land movements but mostly seaborne), and a 31mt or 2% increase to 1,650mt next year.

 

Some additional support in 2025 may be derived from strengthening demand for steel in a number of countries, implying benefits for production and raw materials usage. The World Steel Association’s mid-October update estimated world steel demand rising by 1% next year after declining by 1% in the current year. While China’s steel demand may remain on a decreasing trend, the European Union and Japan may see turnarounds from reduction to revival.

 

Prospects for global grain and soya trade can be expected to change frequently and sometimes quite abruptly. Unpredicted weather conditions affect ing harvests in both importing and exporting countries, and the impact on import demand and supplies, is often influential in modifying predictions.

 

Currently negative signs are prominent. According to the latest US Department of Agriculture monthly estimates and BSA calculations, world trade in wheat, corn and other coarse grains plus soyabeans and meal may be 18mt or 2% lower in the 2024/25 marketing year now starting. The volume (including land movements but mainly seaborne) could fall from 713mt in 2023/24, to 695mt. A large proportion of the reduction may reflect lower soyabeans, wheat, corn and barley imports into China.

 

Within the agricultural bulk commodities sub-category of the minor bulks segment modest growth appears to be unfolding. This group includes various oilseeds and meals, rice, and sugar totalling over 190mt last year. Extra volumes in all these commodities could be seen in 2024 as a whole, resulting in a continued gradual upwards trend.

 

Two-fifths of the entire world bulk carrier fleet consists of Capesize bulk carriers, defined as vessels of 100,000 deadweight tonnes and over, including Newcastlemax as well as large ore carrier sizes. As shown in table 2, fleet growth has been around 2% annually in the past two years and may be unchanged in 2024 before possibly slackening in 2025.