by Richard Scott, Bulk Shipping Analysis
Some uncertainty is evident about positive impulses likely to be derived from domestic economic activity in countries such as European Union members, Japan and China, over the next twelve months. But signs are moderately promising. Against this background, global import demand for minerals and other industrial dry commodities could grow solidly in 2014. Meanwhile, grain trade prospects have improved.
A few more encouraging indications have emerged in recent weeks providing insights into how countries having a large influence on global dry bulk imports are progressing. These, on the whole, reinforced cautious optimism. However, while the USA seems to be picking up solidly, Europe’s revival stamina is difficult to assess, while prospects for sustained momentum gains in China are not altogether clear either.
Forecasts of world grain trade have been steadily revised upwards over the past few months. At the beginning of the current 2013/14 trade year which ends in June 2014, a flat twelve months ahead looked likely, following a slight reduction in the previous period. But the latest International Grains Council forecast suggests 4% growth to 277mt (million tonnes), as shown in table 1.
One especially notable additional support, for wheat and coarse grains trade, is the larger crops harvested in the USA and Black Sea region during the past half year. These have exerted downwards pressure on international grains prices, bolstering import demand. A more specific influence, however, is the expected doubling of China’s wheat, corn and other grains imports to reach over 19mt.
Global steel consumption is expected to increase over the next twelve months, benefiting production volumes and, in turn, raw materials usage and import requirements. A recent report by the OECD steel committee focused attention on prospects for moderate growth in 2014.
After slackening in the first half of last year, global steel consumption strengthened markedly in the third quarter when a 9% increase (compared with the same period a year earlier) occurred. A much higher level in China was a key contributor. Although the OECD report provided no annual forecasts for last year, or for the year ahead, the improvement emerging after mid-2013 seems to be continuing.
Prospects for seaborne coal trade remain favourable, although environmental influences probably will restrict the rate of growth. Last month the International Energy Agency published a new assessment of how the global coal market could evolve over the medium-term, concluding that further expansion is likely, especially among Asian countries.
According to the IEA’s analysis, international seaborne coal trade will continue shifting towards the Pacific Basin over the next few years. Asian countries, by 2018, are expected to comprise more than four-fifths (83%) of world import demand for steam coal, while two-thirds (66%) of metallurgical coal imports could be concentrated in that region. India is identified as the main growth engine for steam coal imports during the next five years.
Phosphate rock trade, previously a ‘major’ dry bulk commodity trade, is now a small element of the minor bulk group. Seaborne movements totalled about 30mt in 2012 and may have been similar or slightly lower last year. There are no signs of a much stronger performance in the next twelve months. India is the largest importer, comprising about one-third of the total.
BULK CARRIER FLEET
In sharp contrast to large increases in other vessel size groups, the world fleet of Handysize (10–39,999dwt) bulk carriers has not expanded over the past twelve months, as shown by table 2. Both newbuilding deliveries and scrapping fell sharply, but the deadweight volumes appear to have been almost identical. During 2014 fleet additions and deletions may again prove similar, suggesting that the fleet will remain stable.