Constraints on imports into many countries have become a more obvious feature of commodity markets during recent months. This trend may prevent any significant overall growth in global seaborne dry bulk trade in 2022, following last year’s revival.
A sombre assessment of prospects for the world economy, published by the OECD organization a few weeks ago, suggested that “the global economy is set to weaken sharply”. Amid the war in Ukraine and higher inflation, consumer spending and business investment are weakening. In these circumstances adverse effects on demand for the products of industries using imported dry bulk commodities are likely. Currently it is hard to predict when a renewed strengthening trend will emerge.
GRAIN & SOYA
The outlook for grain trade remains negative. During the 2021/22 crop year which has just ended, world trade in wheat plus corn and other coarse grains was 9mt (million tonnes) or 2% lower, according to provisional International Grains Council estimates. In the 2022/23 year now starting, IGC calculations point to another reduction of 13mt (3%) to 404.9mt, as shown in table 1.
Among importers, an envisaged 5mt fall in China’s imports to 47.7mt is a large part of the overall 2022/23 decline. Lower volumes into the Middle East region and some other countries are also foreseen, but imports into North Africa and sub-Saharan Africa may remain broadly stable, based on the IGC’s assessment. Reduced exports from Ukraine could be partly offset by increased quantities from several suppliers.
Tighter global availability of energy supplies coupled with much higher prices has refocused attention on coal as a valuable fuel source. In some countries there are signs that a temporary relaxation of targets for removing coal from the energy mix is occurring. This changing scene provides more support for coal import demand and could delay the start of a widely expected longer-term downwards trade trend.
Nevertheless, prospects for substantially higher volumes into importing countries during 2022, compared with the past twelve months, appear to be somewhat limited. An exception is Europe’s coal imports, which may see strong growth. After recovering to reach about 88mt last year, seaborne imports into the EU plus UK potentially could increase by up to 10% this year amid greater steam coal consumption.
Earlier forecasts of increased iron ore purchases by numerous importing countries this year now seem to be surrounded by greater uncertainty. Signs of influences likely to affect steel production negatively have become more visible, with the deterioration in prospects for industrial activity in many economies.
Higher iron ore imports by European countries, Japan, South Korea and several others were expected to more than offset lack of growth in China’s volume during 2022. But confidence in that outcome has receded. The extent of weakness in China (imports down by 5% to 447mt in this year’s first five months), coupled with doubts about Europe’s outlook in the remainder of this year, suggest a more cautious view.
Movements of fertilizers — including potash, phosphates (rock and processed), sulphur and urea — form a large minor bulk trade component which evidently has been fairly flat in the past two years. A total of just under 190mt was recorded in 2021 and a similar volume may be seen this year.
BULK CARRIER FLEET
Handysize bulk carriers with a capacity of 10–39,999 deadweight tonnes comprise 12% of the entire world bulk carrier fleet. As shown in table 2, this segment has been growing by about 2% annually to reach 111.4 million dwt at the end of last year, and a similar increase is expected in 2022. Newbuilding deliveries are set to be lower, based on order book schedules, while the scrapping volume may be unchanged.