An update by the IMF published in mid-July emphasizes the limited support derived from economic trends, however. Global GDP growth was again downgraded slightly, to 3.1% in 2016, with only a very modest improvement to 3.4% next year envisaged. Confidence and investment, vital contributors to healthy progress, seem destined to experience adverse effects related to greater uncertainty.
COAL
Expectations for coal trade indicate the possibility of another overall global decrease this year, but the reduction may be much slower than seen in the preceding twelve months.
One positive and unforeseen development is the 8% increase in China’s coal imports (including lignite) during the first half of 2016 (compared with the same period a year earlier), to 108mt (million tonnes).
A contrasting view of the metallurgical coal trade portion was published a few weeks ago by the Australian Government Department of Industry, Innovation and Science. The world total (including land movements, but mostly seaborne) is expected to fall by 10mt (3%) this year, to 289mt. Lower imports of this coal type into China, down by 9% to 48mt, and declines in some other countries are foreseen.
IRON ORE
Steel production in raw materials importing countries was mostly weaker in the first six months of 2016. China and Japan saw marginal (1%) crude steel output declines, to 399.6mt and 52.0mt respectively. In South Korea there was a larger 3% reduction to 33.4mt, while the European Union experienced much greater weakness with a 6% fall to 82.7mt.
Despite an unfavourable background, iron ore trade developments were not wholly negative. A pick up in China’s iron ore imports, comprising over two-thirds of world trade in the sector, resulted in this country’s January–June 2016 total expanding by 41mt or 9%, to reach 494mt. Consequently some forecasts of global ore trade for the entire year have been raised, showing additional growth.
GRAIN
Prospects for grain trade in the period ahead remain heavily dependent on northern hemisphere importing countries’ domestic grain production. Harvesting of these summer crops is now under way, stretching through to September and estimates may change as a result of unforeseen weather conditions. Recent signs pointed to crop reductions in parts of Europe, North Africa and China, potentially affecting related import demand.
The clearest indications of higher imports of grain (wheat, plus corn and other coarse grains) in crop year 2016/17 ending June 2017 have been seen in several smaller importing countries including Morocco and Turkey. By contrast, downturns are likely in China (because of high stocks) and the EU as a whole, which seem set to more than offset additional volumes elsewhere, causing a possible 3% decrease in world trade.
MINOR BULKS
A key industrial commodity component of minor bulks is bauxite/alumina. Global trade evidently increased to over 120mt last year, boosted by a sharp rise in China’s imports which comprise a large proportion of the total. Currently signs of further growth this year are limited.
BULK CARRIER FLEET
New bulk carrier capacity entering the world fleet in 2016 could be slightly higher than seen last year, as shown in table 2. In particular, higher Panamax and Capesize newbuilding deliveries are expected. However, greatly increased scrapping of old or uneconomic ships is likely to offset most of the new tonnage. The result could be very slow fleet growth, in the 1–2% range.