by Richard Scott, Bulk Shipping Analysis
Various indicators of import demand for commodities in many countries look positive. As a result, world seaborne dry bulk trade could see a solid advance this year. But there are still doubts about how strongly several key elements will evolve. with prospects for parts of coal trade in particular surrounded by uncertainty.
Some assessments of global economic activity are becoming more encouraging. The latest (early March) update published by the OECD organization suggests that the world economy could pick up modestly over the next two years.
After a sluggish 3% average GDP increase in 2016, the pace is expected to accelerate to 3.3% this year and 3.6% next year, amid improving business and consumer confidence.
Among commodity trades with a favourable outlook, soya movements, included in the ‘grain’ category, are expected to continue increasing. Global trade in soyabeans and meal is now approaching the symbolic 200mt (million tonnes) annual volume. Figures shown in table 1, summarizing US Dept of Agriculture forecasts, suggest a 4% rise in the current 2016/17 marketing year, raising the total to 203mt.
Robust consumption trends, together with insufficient or lack of domestic production in the importing countries, underpins the upwards trend in soya trade. More than twofifths of the total is comprised of China’s imports, which seem likely to strengthen further by 4% to reach 87mt in 2016/17. Other Asian importers, and numerous countries elsewhere could also purchase extra quantities.
Higher steel production may be achievable in a range of raw materials importing countries this year, but there are few signs of robust expansion. Compared with the circumstances twelve months ago, however, the global steel market is looking more solid, with higher prices demonstrating an improved demand/supply balance.
Statistics for steel output in the first two months of 2017 show greatly improved levels (compared with a year ago) in key producing countries importing iron ore. But more evidence of a sustainable revival is awaited. In China — the dominant buyer — while potential for steel output growth seems limited, iron ore imports could rise well above last year’s 1,025mt, assuming additional domestic ore is replaced with imports.
Amid further signs of restraining influences affecting coal purchases in several of the main importing countries or areas, optimism about global trade growth has receded.
Nevertheless the picture is not uniformly negative. For example, a recent report pointed to a possible robust rise in imports into the Middle East area, as demand from power stations and cement works strengthens.
In India, however, one of the major buyers, a weakening trend has become a notable feature. After falling slightly in 2015, seaborne coal imports appear to have declined much more sharply in 2016 by around 10%, down to just below 200mt. Consumption of coal in power stations has not been growing as strongly as expected, while output from domestic mines has risen, resulting in imports diminishing.
Trade in steel products (coil, sheet, plate and other items) is a large element of the minor bulks. Estimates of global seaborne steel products movements in 2016 suggest that the total may have been almost flat, at just over 400mt.
European imports rose, but US imports declined. Exports from the dominant supplier, China, fell slightly.
BULK CARRIER FLEET
Another deceleration in fleet growth occurred last year in the Panamax (65–99,999dwt) bulk carrier sector, as shown in table 2. The newbuilding deliveries volume was similar to that of the previous year but scrapping increased. During 2017, both key influences could see reductions. But estimates are tentative, because unpredictable freight market conditions will have an impact. Higher freight rates in recent months have already been reflected in reduced pressure for scrapping.