by Richard Scott, Bulk Shipping Analysis
Commodity import demand around the world has strengthened markedly this year, and a number of positive indicators point to a continuation of the trend into next year. Growth in global seaborne dry bulk trade may exceed 3% in 2017, compared with two minimal annual increases previously.
One key influence supporting this improvement is the pick up in economic activity. Estimates by the OECD organization published in late September suggested that the world economy may achieve GDP growth of 3.5% this year, a notable advance from a sluggish 3.1% seen in 2016. Accelerations in the USA, Europe and Japan, together with no further slowing in China, have been beneficial.
A rising trend in soya trade is contributing. Global movements of soyabeans and meal are expected to increase by over 4% in marketing year 2017/18 starting this month, as shown in table 1, reaching 214mt (million tonnes). During the past twelve months there was a 5% rise, according to US Dept of Agriculture estimates.
China’s strongly rising imports of soyabeans is the main reason. Although domestic production of beans is expanding, the upwards consumption trend boosts foreign purchases. By contrast, high corn stocks are reducing grain imports into China, which could fall by 23% to 15.2mt in the year now starting. As a result of this and some other changes among importers, USDA calculations suggest that global wheat and coarse grains trade may grow by only 1% in 2017/18, to 369mt.
Buoyant steel production in numerous countries, especially the European Union, South Korea and China, is benefiting raw materials movements. Stronger performances in manufacturing industries which consume steel, coupled with additional construction activity, is having a positive impact.
Attention focuses on China’s iron ore imports because these dominate international ore trade. In the first eight months of 2017, the China import total was 714mt, a 7% increase from the same period of last year, adding 44mt. Nevertheless, there is some uncertainty about whether this percentage growth will apply over the entire current year. Plans to cut steel production for environmental reasons have been announced, and the underlying steel demand trend may moderate.
Resumed growth in global seaborne coal trade this year is clearly assisting bulk carrier employment, although many actual or potential negative influences remain prominent. While imports by major buyer India still appear to be weakening, a downwards trend in another large import component, Europe, is showing signs of ceasing to fall and stabilizing, at least temporarily. According to some estimates, India’s coking coal imports in 2017 as a whole could rise from last year’s 50mt, amid higher steel production which grew by 5% in the first eight months. Conversely, steam coal imports, which totalled about 146mt last year, seem more likely to continue falling, reflecting improvements in the performance of domestic coal mining and output.
One of the largest minor bulk elements, world seaborne trade in steel products (coil, sheet, plate and other items), is estimated to have reached about 405mt in 2016. But it is not clear whether that volume will be maintained this year. Signs are mixed.
The trade is very widely spread, complicating forecasts. Major supplier China, exporting about a quarter of the world volume, saw a 29% decrease to 48mt in the first seven months of the current year.
BULK CARRIER FLEET
The panamax (65–99,999dwt) bulker fleet, comprising one quarter of the entire world bulk carrier capacity, is resuming significant expansion. After a minimal increase last year, as shown in table 2, an acceleration to over 3% growth in 2017 seems likely. Newbuilding deliveries may be similar to last year’s level but scrapping is expected to be much lower, amid a freight market pick up.