by Richard Scott, Bulk Shipping Analysis,
After growing fairly briskly in the past twelve months, global import demand for dry bulk commodities can be expected to see a solid advance in 2015. But restraining influences are prominent. Some distinctly negative elements are currently evolving in the coal, grain and several minor bulk trades.
Could a pick up in economic activity around the world provide more impetus? Following the huge reduction in oil prices recently, prospects for GDP and industrial output in a number of countries are looking more encouraging. The IMF sees this advantage as “a shot in the arm” for the global economy, possibly resulting in a 0.3 to 0.7 percentage points GDP gain during 2015, a sizeable boost, especially after continuous downgrades in the past year.
One negative feature presently evolving is weakness in grain import demand, partly offset by positive signs in the soya sector. The latest International Grains Council estimates put world trade in wheat, corn and other coarse grains at 297mt (million tonnes) in crop year 2014/15 ending June, as shown by table 1. This total is 10mt or 3% below the previous period’s volume.
Lower forecast purchases by the European Union, North Africa and China account for most of the decrease, resulting mainly from improvements in their domestic grain harvests. Conversely, further soya trade growth is envisaged. US Dept of Agriculture calculations show a 6mt (3%) rise in global soyabeans and meal movements in marketing year 2014/15 ending September. China’s soya imports could be 6% higher at 74mt.
Additional iron ore imports into China, Japan, South Korea, and several other countries, in 2015, are predicted by Australia’s Dept of Industry in a new report. By contrast, the EU’s volume could decrease. The result could be 39mt or 3% growth in global trade this year, to 1392mt.
Most of the expansion is likely to be contributed by China, which is forecast to import 973mt, a 4% rise. Changes
among the other main elements of world import demand are likely to be relatively small, including a 1mt increase in Japan to 138mt, and a similar 1mt increase in Korea, to 64mt. The EU volume could be 2mt lower at 123mt.
Estimates of global metallurgical coal trade by the same forecaster suggest a modest 6mt (2%) increase in 2015, to 310mt. This category includes coking coal and steam grades used within the steel industry, and calculations are based on all trade, the majority of which is seaborne. These movements comprise about one-quarter of the entire coal sector.
Metallurgical coal trade is limited to a greater extent than iron ore by slow growth in steel production in raw materials importing countries. Currently, steel output expansion in many of these countries this year is expected to be minimal, at around 1% or less. However, upside potential has been created by a possible improvement in economic activity following oil price reductions.
Among minor bulk commodities, cement is a sizeable component. Global seaborne trade is estimated at around 100mt annually in the past couple of years and may increase in the twelve months ahead. Construction industry progress in a range of importing countries will determine the outcome. The USA, Asian countries and Middle East area are key markets.
BULK CARRIER FLEET
During 2014 growth in the world fleet of Handysize (10–39,999dwt) bulk carriers was much slower than seen in other size groups. As shown by table 2, the Handysize fleet’s capacity is estimated to have expanded by only about 1%, although there are signs of a possible acceleration this year, when newbuilding deliveries could rise. Deliveries were lower in the past year, while sales of ships for scrapping also receded.