by Richard Scott, Bulk Shipping Analysis,
The upwards trend in commodity import demand around the world gained momentum last year.
Various signs suggest that it could remain solid through 2018. Preliminary calculations confirm a much improved performance in global seaborne dry bulk trade during 2017, with perhaps a doubled annual growth rate of about 4%.
This outcome was supported by a firm acceleration in economic output growth. Based on IMF estimates published towards the end of last month, the world economy’s GDP may have expanded by 3.7% in the past year (compared with 3.2% in the preceding twelve months). A further uptick to 3.9% is envisaged in 2018, within what the IMF describes as “the broadest synchronized global growth upsurge since 2010”.
Many dry bulk commodity trades benefit from briskly performing economies but the coal sector’s position has become more complex, because of environmen- tal pressures. Despite these restraining influences, global seaborne coal trade resumed growth last year and the volume appears to have increased by at least 2% and possibly much more.
In the coking coal sub-sector movements have strengthened, reflecting higher steel production in many coal importing countries. Table 1 shows estimates for key Asian importers. The main countries in this region, together comprising about four-
fifths of the world coking coal trade volume, apparently raised imports by 3% to 233 million tonnes in 2017 and may see further expansion in the year ahead.
Buoyant steel production in most areas is boosting iron ore consumption and imports. Prospects for this year look positive in some areas but there are doubts about China’s trend. A full statistical picture of steel output in 2017 was published a few weeks ago by the World Steel Association, confirming the widespread upturn unfolding.
Among the most prominent raw materials importers, crude steel production last year was generally 4-6% above the previous year. The main exception was Japan, where the volume was flat, at 105mt. European Union members and South Korea achieved 4% increases, to 169mt and 71mt respectively. India’s production rose by 6% to 101mt, while in China steel output was 6% higher at 832mt.
World movements of grain still seem likely to increase by about 2% in the current 2017/18 crop year ending June, replicating the growth rate seen in the previous twelve months. Changes envisaged among importers are mostly not especially large, with reductions exceeded by rises.
Recently updated International Grains Council estimates show global
trade in wheat plus corn, barley and other coarse grains rising by 7mt (million tonnes) in 2017/18, to reach 360mt. Coincidentally several importers are forecast to raise their imports to 22mt: a 12% rise in the European Union, a 14% rise in Egypt, and 9% growth in Mexico. Indonesia could see a 8% increase to over 11mt, and in South Korea a 7% advance to over 14mt is predicted. These larger volumes are likely to more than offset decreases.
Exports of steel products (coil, plate, sheet and other items) evidently were affected by weakening influences over the past twelve months. One of the largest elements, China’s exports, which exceeded one hundred million tonnes annually in recent years fell steeply during 2017 from 108mt in 2016. By contrast, US imports were up by 4mt (15%) last year, reaching over 34mt.
BULK CARRIER FLEET
The world bulk carrier fleet’s deadweight capacity expanded by 3% during the past twelve months, to 817m dwt at year-end based on Clarksons Research data. Deliveries of newbuilding vessels, and sales for scrapping, were both lower but scrapping diminished especially rapidly. As shown by table 2, newbuildings were about 18% lower in 2017, and a further sharp decline is widely expected in the year ahead as a result of a much reduced orderbook.