During recent weeks there has been contrasting news about economic activity in some of the main countries affecting seaborne trade. Japan’s GDP grew at an annualized rate of 1.7% in the first quarter of this year, after a contraction in the previous three months, a greatly improved performance. But, according to some indications, the eurozone is slackening after solidly gaining momentum in the early months of this year.
IRON ORE
Many steel producing countries which import raw materials have experienced output weakness in recent months. World Steel Association figures show European Union January–April 2016 crude steel production falling sharply by 7% compared with the same period a year earlier, to 54.4mt (million tonnes). China, Japan and South Korea saw smaller 2% reductions, to 261.4mt, 34.3mt and 22.1mt respectively.
However, China’s steel output volumes picked up in the past couple of months, and iron ore imports have been buoyant. According to official figures, total imports of iron ore in the first four months of 2016 reached 325.5mt, up by 6%. Although higher stocks at ports have accumulated, a continuing benefit seems to be resulting from further displacement of ore from domestic mines by foreign supplies.
COAL
Expectations for global seaborne coal trade have become much more cautious, and optimism has faded, since the downwards trend in China’s imports became clearer. Negative influences have also become more prominent in another key country, India, now the world’s largest coal importer.
Widely differing forecasts for India’s imports in 2016 emphasize the uncertainty surrounding the outlook. A recent Australian Government report suggested that a 7% increase in India’s steam and coking coal imports total is likely. By contrast, other independent forecasters are predicting reductions of between 1% and 5%, compared with last year’s volume of around 220mt (historical figures also differ).
GRAIN
Provisional estimates of global trade in wheat plus corn and other coarse grains, in the new 2016/17 crop year starting July, point to a slight decline following a marginal rise in the year now ending. International Grains Council calculations show a 9mt or 3% reduction to 318mt during the year ahead.
Lower purchases by China, Iran and the EU are expected to be the main negative features among importing countries. But prospects will remain highly uncertain until summer domestic harvests, taking place in these and other northern hemisphere countries over the next few months, are completed. Any unexpected crop shortfalls could boost foreign buying. In China, another factor is current high stocks of corn which the government is attempting to reduce, with adverse implications for imports.
MINOR BULKS
Trade in forest products is a major component of the minor bulk commodity trade sector. Key elements are logs, sawnwoods, woodchips and pulp and a wide variety of other items. Signs indicate the possibility of limited growth in the overall volume this year, after a marginal increase last year which raised the total to around 340mt.
BULK CARRIER FLEET
Most of the growth in the entire world fleet of bulk carriers in 2016 will occur within the Handymax (40–64,999dwt) size group. Expansion in this category, as shown in table 2, is likely to be less rapid than seen last year, but still quite brisk. Somewhat lower newbuilding deliveries, coupled with higher scrapping, could reduce deadweight capacity growth to about 6%.