by Richard Scott, Bulk Shipping Analysis,
Rising commodity imports into many countries are still assisting global seaborne dry bulk trade to continue enlarging. But restraining factors have become more visible as well, especially affecting China’s import demand. Consequently a further deceleration in overall trade seems to be evolving this year.
A limited boost is likely to be derived from a gradually improving world economy. An updated OECD forecast published recently pointed to GDP growth in the OECD area (mainly Europe, USA, Japan and Korea) edging upwards from 1.8% last year, to 1.9% in 2015. However, in the emerging economies group including China, a slowing from 4.7%, to 4.2% this year is expected.
After growing slowly in the past twelve months, grain trade could see a slight decline in the current year. According to International Grains Council estimates summarized in table 1, global trade in wheat plus corn and other coarse grains is likely to be about 2% lower in crop year 2015/16 starting this month. From 317mt (million tonnes) in the period just ended, the total is estimated to fall to 310mt.
Reduced imports into the Middle East area and North Africa may be partly offset by increased volumes into Europe. The predictions will remain highly tentative until the completion of summer domestic harvests in these northern hemisphere importing countries. Currently, domestic crops in several Middle East and North Africa countries are expected to be larger, while in Europe reduced crops are envisaged. If unexpected weather conditions alter this outlook, import estimates will change.
Forecasts of global seaborne iron ore trade still point to substantial further growth during 2015. Although a number of importers could contribute additional volumes, an expected sizeable increase in China’s purchases is the principal positive element. Elsewhere, among other key importers such as Japan, Korea and Europe, growth prospects are limited.
Among iron ore exporters, Australia and Brazil are likely to be the main beneficiaries of higher world movements this year. Australian mining companies’ strategy of boosting production and exports, to reduce higher-cost competition, could result in exports greatly exceeding the 2014 total of 752mt. Brazil’s volume could exceed last year’s 344mt.
Prospects for a sustained upwards trend in world coal trade have been greatly diminished by weakening import demand in China. Figures for China’s coal imports in the first five months of 2015 reportedly show a huge 52mt or 38% fall (including low-grade lignite), from 135mt in the same period of last year, to 83mt. A pick-up later this year, if it occurs, may not be sufficient to prevent another large annual reduction.
Several influences are affecting coal purchases from foreign suppliers by Chinese buyers. The slowing economy and slacker activity in industries using coal is a key general influence. More specifically, hydro-electricity generation in China apparently was 12% higher in this year’s first five months, reducing steam coal consumption in power stations, while steel production decreased by 2%, affecting coking coal requirements. Restrictions on the quality of imported coal have been tightened.
A sizeable element of the minor bulks trade sector is comprised of fertilizer raw materials and semi-processed fertilizer products. Seaborne trade volumes — mainly phosphate rock and processed phosphates, potash, sulphur and urea — totalled around 145mt in 2014, according to estimates. Some signs point to further growth of around 2–3% this year.
BULK CARRIER FLEET
Following a marginal 1% rise last year, the deadweight capacity of the Handysize (10–39,999dwt) bulk carrier fleet may increase by about 2% in 2015, as shown by table 2. Newbuilding deliveries seem set to rise, but scrapping also is likely to be higher. This fleet has grown only slowly in recent years, contrasting with much faster expansion in the larger size groups.