Coal trade pace slackening
Recent news and statistics continue to highlight positive factors affecting dry bulk trades. Numerous importers of raw materials, fuels, agricultural products and other bulk commodities around the world are increasing their purchases. However, further evidence points to the overall pace of growth decelerating after last year’s strong recovery.
Reports about activity in China have eased anxiety about the health of key economies. In the second quarter of 2011, China’s GDP maintained its robust expansion, increasing by 9.5% compared with last year’s same period. Given the crucial importance of China for global seaborne dry bulk trade, this was an encouraging performance, but it may be difficult to maintain the pace.
COALOne key commodity trade where signs of slowing are prominent is coal. In particular, the steel industry’s requirements for imported coking coal are widely expected to increase only sluggishly this year. Stronger demand is more visible in the steam coal sector, where many countries in Asia, Europe and elsewhere are likely to buy large additional volumes.
An updated forecast by Abares suggests that global trade in metallurgical coal (coking coal plus steam grades used in the steel industry) could increase by only just over 1% in 2011, to 260mt (million tonnes), following last year’s rapid 22% expansion. Higher imports into India, South Korea, Brazil and the EU are expected to be partly offset by lower volumes into Japan and elsewhere.
IRON ORESteel production figures for the first half of this year show contrasting trends among iron ore importing countries. The European Union’s crude steel output in January–June 2011 was 4% above last year’s first half volume, at 93.4mt, while Japan’s total was 1% lower at 54.1mt, reflecting the effects of the natural disasters in March. South Korea, benefiting from new capacity, achieved a remarkable 19% increase to 33.9mt, and China saw a 10% rise to 350.5mt.
Imports of steelmaking raw materials — iron ore and
coking coal — into Korea are likely to grow vigorously this year. Major new blast furnace mills totalling 8mt annual capacity were introduced during the past twelve months and steel demand is buoyant, although slackening in the 2011 second half may emerge.
GRAINProspects for grain and soya trade have not improved recently. Some signs of extra import demand in the twelve months ahead are visible, but overall trade growth seems likely to be modest. Higher purchases of wheat, corn and soyabeans by China are envisaged, but there are few other notable features. The possibility of sharply increased European imports appears to have receded.
More expansion in the soya sector seems to be the most positive aspect. US Dept of Agriculture estimates show world soyabeans and meal trade growing by 6% to 147.9mt in marketing year 2010/11 ending September. In the following 2011/12 period, a 4% increase to 153.9mt is forecast, mainly reflecting an expected acceleration of the upwards trend in China’s imports.
MINOR BULKSAmong minor bulk commodities, the outlook for bauxite/alumina is positive. Seaborne trade could grow moderately to about 90mt this year. Aluminium production in the main raw materials importing countries — Europe, North America and China — is rising, and Abares predicts a robust 8% increase in global primary aluminium production during 2011.
BULK CARRIER FLEETProvisional data points to newbuilding bulk carrier deliveries from world shipyards reaching 44m dwt in the first six months of this year. An annual total of around 85m dwt for 2011 seems predictable, higher than last year’s figure, as shown in table 2.
However, this massive volume of new capacity will be offset by much greater scrapping, which reached 13m dwt in the past six months, restraining the net rate of fleet capacity expansion.