Dry bulk trade holding up

Several positive influences could benefit commodity import demand in numerous countries during the next twelve months. Although prospects for some elements are not entirely clear, another annual increase in global seaborne dry bulk trade seems quite likely in 2022.

The global economic growth background for dry bulk trade may not be as brisk as last year’s initial recovery from the worst effects of the pandemic, however. An updated International Monetary Fund analysis published a few weeks ago suggested that in 2022 “growth slows as economies grapple with supply disruptions, higher inflation, record debt and persistent uncertainty”. World GDP expansion is predicted to slacken by 1.5 percentage points from 5.9% last year, to 4.4% this year.

IRON ORE

Steel production and raw materials consumption and import demand recovered in many countries last year. World crude steel production increased by 4% in 2021 after declining by 1% in the previous year, according to World Steel Association figures. But outcomes varied widely among the principal iron ore importers.

European Union members together achieved the strongest upturn, with a rise of just over 15% to 152.5mt (million tonnes), closely followed by Japan with almost 15% growth to 96.3mt. South Korea’s advance was much slower at 5%, to 70.6mt. A prominent exception to the upwards pattern was China, which saw a -3% fall to 1032.8mt. As a result China’s iron ore imports, comprising three quarters of the world total, were nearly 4% lower at 1.13 billion tonnes. An upturn during 2022 is not yet foreseeable.

COAL

Assuming that the global economy’s trend over the next twelve months is vigorous enough to firmly support energy use, seaborne coal trade could derive some advantages in a number of countries. Further growth in steel production may provide additional impetus for coking coal movements. Prospects for steam coal trade are more finely balanced.

Among the biggest importers is Japan. Some analysts expect a limited coal imports increase this year, after 3% estimated growth to 173mt in 2021. Higher steel production may increase coking coal purchases. But prospects for an increase in steam coal purchases are more difficult to assess. One complication in the immediate future and longer term is the unclear schedule for reactivating currently closed nuclear power stations, potentially displacing output in coal-fired plants.

GRAIN & SOYA

During the past decade world trade in wheat plus corn and other coarse grains has risen in every year except two, one of which was flat and the second was down by just one percent. Based on recent signs the current 2021/22 crop year ending June is likely to see another reduction. Consistent with the preceding pattern, however, only a 1% decrease to 423mt is estimated by the International Grains Council in its midJanuary update.

The main changes envisaged among importers are expected to be almost offsetting. Asia’s imports could decline by 11.1mt or 6% to 161.0mt as a result of a 17% fall in China’s volume to 50.2mt. But in the Middle East region a 9.5mt (16%) increase to 67.3mt could be seen, reflecting higher purchase by Iran, Turkey and other buyers.

MINOR BULKS

International seaborne movements of steel products (coil, plate, sheet and similar items) form one of the largest minor bulks trades. Last year a recovery occurred after the preceding reduction, raising the total by about 30mt to over 380mt according to tentative calculations. Further growth in 2022 may be seen.

BULK CARRIER FLEET

In 2021 new capacity introduced into the world bulk carrier fleet fell by over a quarter to 38 million deadweight tonnes, as shown in table 2. Half of the total consisted of large vessels. Another big reduction is expected in 2022 based on the schedule of newbuilding deliveries.

TABLE 1: KEY ASIAN SEABORNE COKING COAL IMPORTERS (MILLION TONNES)

Japan South Korea Taiwan China India Total of above

2016 74.0 32.0 10.5 59.3 51.4 227.2 source: various & BSA 2021 estimates * estimate

2017 71.9 32.2 11.1 69.9 50.3 235.4

2018 69.5 31.2 11.2 64.0 56.9 232.8

2019 69.4 31.5 10.9 74.7 56.5 243.0

2020 63.3 30.5 10.1 72.6 55.8 232.3

TABLE 2: BULK CARRIER NEWBUILDING DELIVERIES (MILLION DEADWEIGHT TONNES)

Handysize (10-39,999dwt) Handymax (40-64,999dwt) Panamax (65-99,999dwt) Capesize (100,000dwt and over) Total % change from previous year source: Clarksons Research * estimate

2016 4.6 13.2 9.4 20.0 47.2

2017 3.4 10.8 8.9 15.3 38.4 –18.6

2018 3.1 5.6 5.6 14.3 28.6 –25.5 2019 3.1 8.2 11.4 19.0 41.7 45.8 2020 2.7 9.2 12.1 25.0 49.0 17.5 2021* 67.0 31.0 10.5 60.0 62.0 230.5

2021* 3.3 6.9 8.6 19.0 37.8 –22.9