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The Shipping Tribune

Coal Trade Faces Hurdles


Although influences affecting commodity import demand positively in some countries have been evident in the past few months, it remains unclear whether the pattern is sustainable. Prospects for global dry bulk trade growth in 2024 as a whole still appear to be constrained.

Recent assessments confirm previous ideas of limited prospects for an improved rate of progress in the world economy. The latest (mid April) International Monetary Fund forecast suggests that global growth in gross domestic product during 2024 may be no higher than last year’s 3.2%. Europe and the USA may strengthen, but China and Japan could see a slackening pace. While this background provides only one pointer for dry bulk trade, it is a further indication of possible restraints.


The coal segment is a particular focus for uncertainty about the global dry bulk trade outlook. Last year China’s huge upturn in seaborne coal imports contributed 70% of the entire world increase in all dry bulk trade. Despite a strong performance in the first quarter of 2024 a downturn, perhaps sizeable in China’s coal purchases during the remaining months seems quite likely.

A forecast by analysts at the Australian Government Department of Industry prepared a month ago showed a fall of 71mt (million tonnes) or 16% in China’s 2024 coal imports, to 365mt (including some land movements but mostly seaborne). Reduced volumes on this scale could be difficult to offset with any growth emerging elsewhere among coal importers. Some other forecasters are not so pessimistic.


Conversely, steel demand estimates provide a more solid foundation for steel industry raw materials trades — iron ore and coking coal — during the current year. In its short range outlook published last month, the World Steel Association suggested that steel demand in China and Japan could remain flat in 2024, accompanied by a marginal decrease in South Korea and growth in Europe.

Looking at figures for crude steel production in the first quarter of this year, a generally negative trend has prevailed. WSA data shows China’s steel output declining by 2% compared with the same period of last year, to 256.6mt. Output in both Japan and the European Union was 1% lower at 21.5mt and 33.0mt respectively, while South Korea saw a 2% decrease to 16.2mt.


World trade in wheat plus corn and other coarse grains is expected to strengthen in the current 2023/24 trade year ending third quarter 2024. From later in 2024 onwards prospects are still hazy, awaiting clarification of the likely outcome of summer domestic harvests in northern hemisphere importing countries.

Updated estimates published by the US Department of Agriculture last month showed the world grain trade total rising by 18mt (4%) in 2023/24, reaching 441mt. These volumes are mostly seaborne. The wheat trade year ends in June while for coarse grains the year-end is September. Imports into east and south east Asia are expected to be the main supporting influence, together with higher volumes into North Africa, partly offset by a lower EU total.


In the ‘agricultural bulks’ sub-category of the minor bulks segment, potential for growth in 2024 is evident. This group includes various oilseeds and meals, rice, sugar and fertilizers, totalling about 190mt last year. An upturn in soyameal movements, comprising about a third of the category, is expected to contribute.


Among bulk carrier groups, Capesize tonnage (statistically defined as 100,000 deadweight tonnes and larger — including Newcastlemaxes and ore carriers) forms almost two-fifths of the entire world fleet. After growing by 10m dwt (2.5%) in 2023 to 394m dwt at end-year, predictions of lower newbuilding deliveries and higher scrapping may result in a slower growth rate below 2% during the current year.

Source: Dry Cargo International

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