By Richard Scott, Bulk Shipping Analysis,
Although growth drivers for global seaborne dry bulk commodity trade have receded, some positive momentum is still visible. Adverse influences affecting imports into a number of countries are very prominent, but extra volumes elsewhere may be enough to result in limited overall expansion during 2016 and into next year.
In its latest report, the OECD organization emphasized a subdued backdrop for trade. The global economy is stuck in a “low-growth trap”, and progress remains “disappointingly weak” eight years after the financial crisis. World GDP growth this year is estimated at a low 3%, unchanged from the previous twelve months, and only a modest uptick to 3.3% is forecast in 2017. Sluggish business investment spending is cited as a key constraint, together with China’s slowing economy.
Over the next twelve months, world trade in wheat plus corn and other coarse grains is likely to be weakened by a sharp fall in China’s feedgrain imports and lower imports into the European Union. Currently there are no signs of rises sufficient to provide a complete offset. Consequently the global total in the new 2016/17 crop year just starting could be down slightly by about 3%, to 318 million tonnes (see table 1), according to International Grains Council estimates.
By contrast, soyabeans and meal trade is expected to continue on an upwards trend. Growth prospects are good, based on US Dept of Agriculture figures. In the current marketing year ending September a 7% increase to 196mt is forecast, followed by a further 4% rise in the 2016/17 marketing year starting October. Rising imports into China are envisaged, as well as substantial growth among other buyers.
Steel production weakness in Europe, Japan and South Korea is adversely affecting raw materials consumption and import demand. Iron ore imports into these countries are likely to be lower this year unless there is a solid pick up in steel output levels during the second half, which is difficult
to foresee at present.
In China, conversely, iron ore imports advanced robustly in
the first five months of this year. The January–May 2016 total was 34mt or 9% above the volume seen in the same period a year ago, at 412mt. Steel output was down slightly, but continued displacement of domestic high-cost ore by foreign supplies is evident. It now seems likely that the annual imports total this year will show a substantial increase.
Several forecasts point to another reduction in steam coal trade, comprising almost four-fifths of all world seaborne coal movements, in 2016. Some estimates show a decline of around 20mt, possibly up to 30mt, from a volume of around 880mt last year. However, one major element, China’s imports — which have fallen steeply in the past two years — is very hard to estimate.
Unfavourable factors restricting global coal trade are conspicuous. Environmental influences are at the forefront. Some countries, particularly in Asia, are still favouring coal, however. Reliability of supplies, coupled with the economic advantages of coal as an energy source for these countries, suggest that part of the world market will remain buoyant over the years ahead.
Fertilizer raw materials and semi-processed fertilizers form a sizeable element of the minor bulks trade category. Estimates of seaborne movements — including phosphate rock and processed phosphates, potash, sulphur and urea — suggest that the total reached over 155mt in 2015 and could continue rising this year.
BULK CARRIER FLEET
In the Handysize (10–39,999dwt) world fleet of bulk carriers, carrying capacity may remain flat or even decrease marginally during 2016. The deadweight capacity of newbuilding deliveries is likely to be lower than seen last year, and may be offset by scrapping, as shown in table 2.