Contrasting patterns in grain and soya trade - BULK CARRIER TRADE & FLEET OUTLOOK - January 2017

Commodity movements around the world showed signs of reviving growth during the past twelve months. Although adverse influences remained prominent, global seaborne dry bulk trade apparently increased slowly in 2016. A continuation of this trend may be seen over the year ahead.

The subdued pace of economic activity is providing only limited support for trade. Average world GDP growth last year is estimated to have been below the previous year’s 3.1% rise. and forecasts for 2017 suggest just a limited improvement to 3.3% (based on OECD figures). China’s economy is expected to decelerate further, while most of the contrasting slight pick up elsewhere probably will occur in the USA.

GRAIN

Prospects for grain trade (wheat, plus corn and other coarse grains) in the current 2016/17 crop year ending June have brightened, compared with earlier expectations, but a small 2% decline to 338mt (million tonnes) is still indicated. As shown by table 1, a summary of recent International Grains Council calculations, lower imports into the Asian region are the main reason. In particular, China’s grain imports seem set to continue falling amid attempts to reduce excessive domestic corn stocks.

A different pattern is occurring in the soya trade segment. According to US Dept of Agriculture estimates, global soyabeans and meal movements are likely to maintain an upwards trend in marketing year 2016/17 ending Sepember. The total is expected to exceed the symbolic 200mt level for the first time, reaching 202mt, a 4% increase. Imports of beans into China are forecast to grow by 3%, to 86mt.

IRON ORE

After regaining growth momentum last year, is another large increase in world iron ore trade foreseeable in 2017? In other commodity sectors attention immediately focuses on China, which usually has the greatest potential for large annual changes in import cargo volumes. Assessing iron ore movements is similar. Among the main iron ore importing countries, Japan, European Union members as a group, and

South Korea appear to have experienced flat or decreasing volumes in the past twelve months. By contast China, the dominant importer, sharply increased its 2016 quantity to over 1 billion tonnes. During the next twelve months Chinese buyers may again raise their purchases, as further substitution of domestic supplies occurs. Other key buyers may see flat volumes or limited growth.

COAL

Changes in global coal trade are no longer mainly dependent on commercial factors such as economic activity, energy consumption, inter-fuel competition and relative prices. Environmental influences have become much more instrumental in shaping trade flows, and these influences are largely determined by national government and international policies, which in turn reflect political decisions.

Forecasting global coal trade consequently is now more subjective. Last year saw another decrease in the total, based on preliminary figures. But the downwards trend was greatly restrained by an upturn in China’s imports, after the preceding rapid reduction. Following another large decline in 2015 to 204mt (including lignite), China’s coal purchases last year are estimated to have risen by over one-fifth. Some forecasts suggest that this revival could be maintained in the year ahead.

MINOR BULKS

A sizeable part of minor bulk trade consists of fertilizers, comprising raw materials and semi-finished products. World seaborne movements of urea, sulphur, potash and phosphates appear to have exceeded 150mt last year, a similar volume to that seen in the preceding twelve months, and may remain fairly stable.

BULK CARRIER FLEET

During 2016 the world fleet of Handysize (10–40,000dwt) bulk carriers evidently grew at a similar rate to that seen in the two previous years. Newbuilding deliveries were lower last year, but scrapping also declined as shown by table 2. In 2017 this pattern of slow growth could persist, based on highly tentative calculations.