by Richard Scott, Bulk Shipping Analysis

During the past twelve months increases in
commodity imports, in some countries around the
world, were prominent, offsetting reductions
elsewhere. A small rise in global seaborne dry bulk trade
seems to have resulted. In 2017 a similar pattern may
unfold, supporting a continued upwards trend.
Recent forecasts for economic activity point to a slight
strengthening of momentum this year, although there are
great uncertainties. An IMF update published a month ago
estimated global GDP growth improving from an estimated
3.1% last year, to 3.4% in 2017. The quicker US expansion
envisaged is a big contributor to the overall acceleration
while China, by contrast, is still expected to continue slowing.
Uncertainty about the coal trade outlook is particularly large.
Negative influences last year were accompanied by an
unexpected strong upturn in China’s imports, which
restrained the pace of decline in the world total. During the
year ahead, another large rise in China seems unlikely, and
there are not many signs of expansion in other countries
which could provide a boost.
An Australian Government forecast, published last month,
suggested that global steam coal trade (including land
movements, but mostly seaborne) could be 1% lower in
2017, compared with the previous year, at 1024 million
tonnes. Metallurgical coal trade is expected to be flat at an
estimated 314mt. In both categories China’s imports are
predicted to weaken, and European steam coal import
demand could decrease.
Figures compiled by the World Steel Association show that in
2016 weakness was a feature of steel production in many
countries which import raw materials. Further output
reductions were seen, and where increases occurred, these
were marginal. The dominant producer China saw crude
steel output rise slowly by just over 1% last year, reaching
808mt, although iron ore imports increased much faster. In
Japan, the steel total was flat at 105mt, while in the
European Union a 2% decline to 162mt was seen. Currently
there are tentative signs of limited increases in steel
production in some countries over the next twelve months,
assuming that demand from steel-using industries remains
fairly solid or improves.
Estimates of grain trade in the current 2016/17 crop year
ending June now point to only a marginal reduction from the
previous twelve months, instead of the much larger decline
expected earlier. Lower purchases by China are the principal
negative change foreseen among buyers, accompanied by
increases in numerous other countries.
Imports of wheat, corn and other coarse grains into China
are likely to fall by about one-third in 2016/17, to 15.4mt,
based on International Grains Council calculations, amid
attempts to reduced excessively high domestic corn stocks.
European Union grain purchases also may decline, by 11% to
19mt. However, India is buying a much larger volume. The
result of all the changes is a predicted minor 3mt or 1%
decrease in overall world grain trade, to 340mt.
One large element of the huge and diverse minor bulk trade
category saw a reduction last year after expanding rapidly in
previous years. Exports of steel products (coil, plate, sheet,
etc) by China reportedly were 3% lower at 109mt, under
pressure from a number of importers to restrain volumes.
Global steel products trade in total may have been slightly
lower in 2016, partly as a result, and prospects for this year
are unclear.
The world fleet of bulk carriers increased by about 2% in
2016, boosted by a large volume of newbuilding vessels
delivered by shipyards, totalling over 47 million deadweight
tonnes, as shown in table 2. Scrapping of old or uneconomical
tonnage had been expected to rise, but instead fell,
contributing to a sizeable net increase in fleet capacity. In
2017 continued, possibly slower growth seems quite likely.