Dry bulk stays resilient

Further signs of resumed momentum in commodity import demand around the world have been emerging recently. A continuation of this trend, which seems a realistic expectation, could enable world seaborne dry bulk trade in 2023 to recover from last year’s weakness.

 

Several positive indicators for the global economy, and strengthening effects of progress on activities in countries importing industrial dry bulk cargoes, are visible. One of the most closely watched events is China’s return to a more normal pattern after the ending of tight pandemic controls. After reviving to 4.5% gross domestic product growth in the first quarter, from 2.9% in the previous three months, a sustained recovery could provide support for commodity usage and imports.

 

Many uncertainties still surround the global outlook for energy demand and coal consumption over the next twelve months and longer term. Nevertheless some forecasters are envisaging resumed growth in world seaborne coal trade during 2023 following a flat performance last year.

  

A forecast published a few weeks ago by the Australian Government Department of Industry was more restrained, predicting a stable volume. In 2023 world coal trade (including land movements, but mostly seaborne) is estimated to total an unchanged 1,335mt (million tonnes). According to this calculation, steam coal trade may be marginally lower at 1031mt, while coking coal trade rises by 2% to 304mt. Higher steam and coking coal imports into the Asian region are expected to provide support.

 

Among iron ore importers, prospects for growth in the period ahead seem limited. Demand for steel from the main consuming industries in many countries is still subdued. Yet the World Steel Association last month suggested that global steel demand could pick up in 2023, growing by 2.3% after a -3.2% reduction in the previous twelve months, despite a flat outcome in Europe this year.

 

Steel production changes during the first quarter of this year were mixed. In China brisk growth in crude steel output was recorded, compared with the same quarter last year, rising by 6% to 261.6mt. Elsewhere, in the main iron ore importing countries, comparisons based on WSA data showed negative results. In the European Union production was down by 10% at 33.1mt. Japan’s volume declined by 6% to 21.6mt, while South Korea experienced a 2% decrease to 16.7mt.

 

World trade in wheat plus corn and other coarse grains is expected to show a reduction in the current 2022/23 trade year now approaching its end in third quarter 2023. Prospects for an upturn in 2023/24 remain unclear, awaiting the outcome of mid-2023 northern hemisphere domestic harvests in importing countries.

 

An updated forecast published last month by the US Department of Agriculture suggests that the world wheat and coarse grains trade total could be down by 14mt or 3% in 2022/23, at 419mt. The wheat year ends in June and the coarse grains year in September.

 

One positive change is EU imports, forecast to rise by 10.8mt (41%) to 37.1mt. But lower imports into the East Asia Region (especially China’s predicted lower volume) and reductions elsewhere are likely to be more than offsetting.

 

A number of commodities in the minor bulk segment form an ‘agricultural’ bulks category, including various oilseeds and meals, rice, sugar and fertilizers. After totalling an estimated lower 420mt in 2022, seaborne trade may pick up this year according to tentative signs.

 

Capesize and larger vessels, statistically defined as ships of 100,000dwt and over, comprise two-fifths of the world bulk carrier fleet. As shown by table 2 the capesize fleet grew by a slower 2% last year. During 2023 a similar growth rate seems likely, based on expectations of higher newbuilding deliveries and higher scrapping.