by Richard Scott, Bulk Shipping Analysis,
Global seaborne dry bulk trade grew fairly briskly last year, but the expansion rate estimated was noticeably lower than seen in the three preceding years. Restraining influences affecting commodity import demand became more prominent, and this slackening pattern may continue during 2015.
The IMF’s latest forecasts of economic growth, published towards the end of last month, provide some limited encouragement about the background for trade. World GDP is predicted to increase at a slightly improved pace of 3.5% in 2015, compared with 3.3% in each of the past two years. A boost from lower oil prices is expected to have a favourable impact, but some negative factors including weak capital investment spending could offset the benefit.
Although the volume of international coal trade in 2014 cannot be calculated accurately until more information is available, it appears that the total was flat or possibly down slightly. This outcome represents a marked change compared with the strong expansion trend seen previously.
Weakness in the steam coal sector was especially evident, and some parts of the coking coal sector also receded, as shown by table 1. One very visible negative influence was a sharp downturn in China’s coal imports (including low-quality lignite), from 327mt (million tonnes) in the preceding year, to 292mt, an 11% reduction. Currently there are no clear signs of an improvement over the twelve months ahead.
Among raw materials importers, steel production in 2014 was only slightly stronger in many countries. Japan’s crude steel output was flat at 111mt, while China’s vast steelmaking industry achieved a marginal 1% increase, to 823mt. In the European Union, production rose by 2% to 169mt. Larger rises were achieved by Taiwan, up by 4% to 23mt, and South Korea, 8% higher at 71mt.
Despite this fairly subdued backdrop, iron ore trade expanded very strongly, mainly because of China’s still rapidly growing import demand. Imports of iron ore into China jumped by 14%, reaching a vast total of 933mt. The upwards trend may continue during 2015 as well, according to many forecasters. Lower international iron ore prices make imports more attractive compared with ore from Chinese domestic mines, some of which is being displaced.
Since the middle of last year grain trade has weakened, mainly as a result of lower imports into Europe and China. Both of these importers experienced good domestic grain harvests in mid-2014, ensuring ample supplies and enabling foreign purchases to be reduced.
However, earlier forecasts of a 4–5% decline in world wheat and coarse grains trade during crop year 2014/15 ending June are now seen as too pessimistic. Revised International Grains Council estimates published in late January show trade decreasing only slightly by 2%, to 300mt. Currently, it is too early to estimate trade progress from mid-2015 onwards, which is dependent on unpredictable weather in importing and exporting countries.
Weakness in global minor bulks trade, over the past twelve months, reflected a steep downturn in China’s imports of several items in which this country has become a dominant buyer. Figures show China’s nickel ore imports down by 24% in 2014, to 48mt, while bauxite and alumina imports fell by 45% to 42mt. Prospects for a rebound in the year ahead are unclear at present.
BULK CARRIER FLEET
Additional cargo-carrying capacity joining the world bulk carrier fleet last year was lower than seen in the preceding period, continuing the downwards trend. An estimated 49 million deadweight tonnes of bulk carrier newbuildings was delivered by shipyards, as shown by table 2, a 22% reduction.
Based on order book schedules, tentative indications suggest that in 2015 an increased volume will be completed, possibly accelerating the fleet growth rate.