by Richard Scott, Bulk Shipping Analysis
Within many commodity trades, positive influences are supporting imports into a wide range of countries. Prospects for the remainder of 2014 and into next year seem broadly favourable, although some indications point to a possible slackening of grain import demand over the twelve months ahead.
Benefits from reviving global economic activity are envisaged. A recent OECD analysis suggested that economic recovery could strengthen moderately this year and next. World GDP growth is forecast at 3.4% in 2014 (compared with last year’s reduced 2.8%), followed by a further improvement in 2015 to 3.9%. Significantly, an improving overall trend is predicted despite expectations of a continued slowing in China.
The outlook for global seaborne iron ore trade during this year as a whole is encouraging. As emphasized in table 1, however, most of the additional import demand estimated is likely to originate in China. Incremental volumes in the other main importing countries probably will be quite modest.
Positive steel industry performances among raw materials importers are shown by figures for crude steel production in the first four months of 2014. World Steel Association statistics reveal that European Union steel output was 6% higher, compared with last year’s same period, at 58.5mt (million tonnes).
In Japan, a 2% rise to 36.5mt was achieved, but South Korea saw much faster 8% growth to 23.8mt. China’s production was 3% larger, at 271.9mt.
Numerous coal importing countries look set to purchase higher volumes in the current year. While the focus remains firmly upon Asian buyers, where potential for rising volumes is clearest, other buyers are contributing as well. Some European purchasers may need additional quantities.
In Japan, which is still one of the largest coal importers, receiving about one-sixth of the world total (almost 192mt last year), two annual increases could be followed by
another rise in 2014, according to estimates. Although there is a possibility that several nuclear plants may resume power generation, with potential adverse effects on coal requirements, the timing is uncertain, and coal may not be the first alternative fuel to be displaced.
Predictions of global grain trade in the twelve months ahead are still subject to great uncertainty. In particular, upcoming harvests of wheat and coarse grains in Europe, North Africa, the Middle East and China will have a huge influence on imports. These crops remain dependent upon unpredictable weather. There are no signs currently of any large crop shortfalls, but conditions may change.
A tentative early forecast by the International Grains Council suggests that world grain trade could decrease slightly in 2014/15 starting July. After a very robust 12% increase during the year now ending, raising the total to 297mt, a 3% reduction is envisaged. Lower imports into China is the main negative element foreseen, accompanied by only limited changes elsewhere.
One of the principal elements of the minor bulk sector is forest products trade, consisting of logs, sawn woods, wood chips and pulp and many other items. World seaborne forest products trade appears to have grown solidly by about 4% last year, reaching about 190mt. Additional volumes into key countries in Asia and Europe could enable trade to increase by a similar amount in 2014.
BULK CARRIER FLEET
Among bulk carrier sectors continuing to expand rapidly is the Handymax (40–64,999dwt) size group. This fleet’s progress is shown in table 2. Lower newbuilding deliveries are likely during 2014, compared with last year, but scrapping could diminish as well. As a result, the world Handymax fleet’s deadweight capacity could grow by 7% this year, only marginally less rapidly than seen in the previous twelve months.