by Richard Scott, Bulk Shipping Analysis
Seaborne trade in many dry bulk commodities continues to benefit from a number of positive factors. Import demand for iron ore, coal and a wide range of other minerals and industrial commodities is rising. The agricultural cargoes sector has been restrained by negative influences in the grain trade, but signs of a strengthening ahead in this category are beginning to emerge.
Some recent developments affecting global economic activity could provide support. A pick up in Japan’s GDP growth rate to a solid 3.5% annualized in the first quarter seemed to suggest that government policy changes are succeeding. The US economy also appears to be regaining momentum. Evidence of a re-acceleration in China has been patchy however, and the EU remains in recession with no clear pointers to when this will end.
Prospects for global seaborne iron ore trade expansion during 2013 as a whole are still greatly dependent on how China’s import demand evolves. As shown by table 1, expectations for increased volumes among the other main importers are quite limited.
Figures for crude steel production in this year’s first four months underline contrasting experiences in key raw materials importing countries. World Steel Association statistics reveal that January–April 2013 steel output in China was over 8% higher than seen in the same period a year earlier, at 258.2mt (million tonnes). Japan’s output was less than 1% up, at 35.8mt. Conversely, South Korea saw a 5% decline to 22.1mt, and the EU volume was 6% lower at 55.3mt.
Recent indications of the coal trade trend suggest that not all the principal factors are currently developing positively. Yet further robust growth in global volumes seems achievable, assuming that China’s and India’s imports continue to perform strongly, accompanied by some extra amounts elsewhere.
One unusually weak element is the sustained downwards trend in US coal imports. In the mid-2000s, when these
became more significant, about 33mt annually was purchased. Since then a steep decline to only 8.3mt in 2012 and possibly lower this year has been a noticeable feature. But in the past few years coal exports from the US increased greatly, reaching 107mt last year, amid higher gas usage in power stations, releasing more coal for export markets.
Until summer domestic grain harvests in northern hemisphere importing countries can be estimated more accurately, forecasts of global grain trade will remain highly tentative. The US Dept of Agriculture’s initial calculations point to a possible 2% increase in trade during the 2013/14 marketing year starting third quarter 2013, raising the total to 273.9mt.
USDA’s first forecast of related soyabeans and meal trade is much more optimistic. Growth of 13mt or 9% is predicted in 2013/14, boosting the global total to 163.4mt. A large part of this expansion could be contributed by sharply higher imports into China. Reflecting low stocks, reduced domestic production and rising consumption of soyameal and oil, China’s soyabeans imports are expected to rise by 10mt (17%), reaching 69mt.
Forest products trade, one of the principal elements of the minor bulks sector, consists of numerous items including logs, sawnwoods and woodchips. Growth in global seaborne movements appears to have been about 3% last year, raising the estimated total to over 180mt. Some additional volumes among major importers including Japan, China, other Asian countries and Europe could result in another increase during 2013.
BULK CARRIER FLEET
The Handymax (40–59,999dwt) bulk carrier fleet’s growth is likely to continue decelerating this year, as shown in table 2. Newbuilding deliveries are set to fall very sharply, possibly accompanied by reduced demolition sales. But the 2013 fleet capacity expansion rate probably will remain quite rapid at almost 7%.