Ongoing support from coal trade

Various components of commodity import demand in a range of countries are holding up or strengthening and may continue to evolve positively. But following prospective solid growth in global seaborne dry bulk trade in 2024, restraints may tighten.

 

Underlying support for dry bulk trade from global economic activity is still not gaining much momentum. The latest (mid-July) International Monetary Fund update points to world growth in gross domestic product remaining close to last year’s lower 3.3% in 2024, at 3.2%, including slightly lower growth in China. IMF analysts suggest that the world economy is “in a sticky spot”, with the disinflation trend’s progress slowing, resulting in interest rates staying elevated.

 

A supportive trend in coal trade has been unfolding this year, benefiting in particular from the sustained strength of China’s imports after last year’s large increase. The International Energy Agency’s mid-year coal market update predicts that world trade in 2024 “will set another record if Chinese demand continues,” forecasting a small annual increase of 1%.

 

Among major Asian importing countries reviewed in the IEA analysis, not all are evolving firmly. Japan, South Korea and Taiwan saw reduced volumes last year and are expected to see further reductions during the current twelve months. By contrast a strong pattern in India’s imports seems to be evolving in 2024, while in Vietnam — becoming a much more significant buyer — a vigorous upwards trend is being boosted by rising power station coal usage.

 

Some forecasters point to potential for another rise in world seaborne iron ore trade during 2024, after last year’s upturn. But the growth foreseen is largely dependent on continued expansion in dominant importer China’s volumes, prospects for which are uncertain in the second half of this year.

 

A revised assessment by analysts at the Australian Government’s Department of Industry, published in early July, is not so optimistic. World iron ore trade (including land movements but mostly seaborne) is predicted to grow only marginally by 0.5% in 2024 as a whole, to 1,628mt (million tonnes). In this forecast China’s imports are estimated at 1,118mt, a 5% decline from last year. Higher imports into Japan, South Korea, Europe and other countries could be partly offsetting.

 

The outlook for world grain and soya trade in the period ahead is showing some potential for a downturn. In the 2024/25 trade year starting October 2024 (beginning July for wheat) grain import demand may diminish, although a positive trend in the soyabeans and meal segment could continue. Within the current 2023/24 year, a 6% increase is estimated.

 

Based on a Bulk Shipping Analysis compilation of separate US Department of Agriculture calculations, world trade in wheat, corn and other coarse grains, plus soyabeans and meal, is likely to be about 12mt or 2% lower in 2024/25, compared with the previous twelve months. The total could decline from 707mt, to 694mt, mainly as a result of lower imports into several Asian and European countries.

 

Following robust growth of about 6% in world seaborne trade in aluminium raw materials — bauxite, and the processed alumina — during 2023, another increase is expected this year. The total could reach about 210mt, mostly as a consequence of China’s sustained upwards imports trend.

 

Expansion of cargo-carrying capacity in the world fleet of bulk carriers looks set to be assisted by a similar volume of newbuilding deliveries to that seen last year. The newbuildings total in 2024 may be about 35 million deadweight tonnes, although the breakdown among vessel size groups may differ, compared with last year, as shown in table 2. Higher Handysize, Handymax and Panamax completions could accompany sharply lower Capesize deliveries.