Underpinning a cautiously optimistic view of trade is the broadly encouraging outlook for global economic activity. Updated IMF forecasts published a few weeks ago indicated that in 2018 overall world GDP growth may continue improving to 3.7%, from 3.6% this year and 3.2% last year, despite an expectation of renewed slowing in China. Solid growth in the European Union, Japan and USA is expected to contribute to the future advance.
Some of the negative sentiment surrounding global coal trade has been reduced by evidence of resumed expansion. In particular, additional import demand in a number of Asian countries is clearly visible (see table 1), and there are tentative indications suggesting that the steep decline in EU imports has ceased, at least temporarily.
However, some forecasters remain highly cautious about future coal trade evolution. Estimates published by Australia’s Dept of Industry, Innovation and Science last month showed world metallurgical coal trade falling by 10% in 2018, after a 20% jump to 377mt
(million tonnes) this year. In the much bigger thermal coal trade category, only a marginal 1% increase to 1058mt is estimated in 2017, followed by a 2% decline in the following twelve months.
Buoyant steel demand around the world is benefiting production at mills in numerous countries, with advantages for seaborne raw materials movements. According to World Steel Association figures, China’s crude steel production was 6% higher in the first nine months of 2017, compared with last year’s same period, at 639mt. In the EU and South Korea, 3-4% increases to 126.4mt and 52.8mt respectively were seen, but Japan’s volume remained almost flat at 78.3mt.
A new forecast of steel demand, which the WSA published recently, suggests that the higher levels estimated for this year could be broadly maintained in 2018. In China and Korea unchanged or almost unchanged demand for steel is envisaged during the next twelve months, while Japan and the EU could see marginal 1% rises.
Lower wheat and barley imports into China, and lower wheat imports into India, are likely to be features of global grain trade during the current 2017/18 crop year ending June 2018. Excessive grain stocks in China, and a better domestic harvest in India are having negative effects on foreign buying.
Elsewhere among grain importers, signs of rising imports are prominent. As a result, the International Grains Council predicts that world trade in wheat and coarse grains could increase by 7mt or 2% in 2017/18, reaching 359mt. Larger volumes imported by South Korea, Iran, Saudi Arabia, Mexico and European Union countries probably will more than offset the reductions envisaged.
Agricultural and related minor bulk cargoes, as a group, appear to be resuming growth this year. Although lower sugar movements are estimated, additional oilseed/meal and cereals quantities could raise agricultural minor bulk trade to over 230mt. Movements of urea, potash and phosphate could also increase, raising seaborne fertilizer trade to around 160mt, according to some estimates.
BULK CARRIER FLEET
The Capesize (100,000dwt and over) bulk carrier segment comprises about two-fifths of the entire world fleet of bulk carriers. As shown in table 2, growth in Capesize deadweight capacity is likely to be faster in 2017 than seen last year despite lower newbuilding deliveries, because scrapping has fallen sharply amid improved freight market rates.
A limited newbuilding delivery schedule for next year suggests that a fleet slowdown may resume.