by Richard Scott, Bulk Shipping Analysis,
Numerous influences are still providing useful underpinning for commodity import demand increases in many countries. The upwards trend in world seaborne dry bulk trade appears to be slackening compared with last year’s brisk performance, however, and trade disputes have become a greater cause for anxiety. A pattern of slowing economic expansion among the advanced countries unfolded during this year’s first few months. Deceleration was widespread, encompassing the USA, European Union and Japan. But reduced GDP growth rates are widely seen as temporary, a ‘soft patch’, although clear evidence of economies regaining the more vigorous momentum seen previously is awaited.
GRAIN & SOYA
Support for the positive trend in dry bulk trade seems likely to be derived from rising grain movements. According to recent International Grains Council estimates — based on analysis of individual countries’ import requirements as well as export supplies available — global trade in wheat plus corn and other coarse grains could continue increasing at about a 2% rate, in the new 2018/19 crop year starting this month. The forecast of traded grain volumes in the twelve months ahead, totalling 369mt [million tonnes], may change if harvests in northern hemisphere importing countries are substantially different to what is currently expected. These importers, including Europe, North Africa, the Middle East area and China comprise about two-thirds of the world total. Any large shortfalls in domestic crops among this group may result in extra foreign purchases.
Amid receding expectations for another huge boost from China’s additional imports this year, forecasts of global iron ore trade growth have been lowered. Nevertheless an increased volume remains a plausible calculation, reflecting solid steel production trends in many influential raw materials importing countries. An element of uncertainty has been injected by trade tensions involving steel products movements, with potential for disrupting import and export patterns, in turn affecting steel production volumes. Effects have been limited so far but may enlarge. Crude steel output has increased at rates of between 1% (in Japan) and 5% (in China) during the 2018 first five months. The EU’s growth was 2% and in South Korea 4%.
News emerging recently about two of the largest coal buyers in Asia, which together comprise almost one-third of global seaborne coal imports, has illustrated differing circumstances. South Korea’s growth prospects seem to have receded, while India’s outlook evidently has improved. Underlying these and other changes is the sustained emphasis in many countries on cutting pollution, with unfavourable implications for the coal market in the longer term. Last year Korea purchased more coal, reflecting new power station capacity being introduced and shortages of nuclear power caused by temporary plant shutdowns. Imports rose by 10% to reach 148mt. A similar boost is not envisaged during 2018. In India a modest strengthening emerged last year, when a 2% increase to 203mt was seen after a sharp reduction in the preceding twelve months. Some forecasts point to a 4–5% rise in the current year, amid higher steam and coking coal requirements.
Global seaborne movements of fertilizers, comprising mainly phosphates, sulphur, urea, and potash are estimated to have totalled around 160mt in 2017, a 4% increase following two years when a flat trend seemed to be evolving. Some of the components are now showing signs of further growth.
BULK CARRIER FLEET
Handy-size vessels in the 10–39,999dwt size group comprise about 12% of the world bulk carrier fleet. This size group’s growth accelerated slightly last year to almost 2%, when the total reached 96 million deadweight tonnes. A similar increase is estimated in 2018, despite expectations of lower new building deliveries, because scrapping also seems likely to be much reduced.