Tradeviews Bulker Forecast Report – Highlights December
Tradeviews review all the recent important stories and events that shape dry cargo bulker demand. The intel from this report feeds their bottom up 5-year forecast.
Click here to open the full report:
Economic
The OECD has released its latest Economic Outlook noting that inflation is easing, but
growth is slowing. Despite stronger-than-expected GDP growth in 2023, tightening financial
conditions, weak trade and subdued confidence are taking a toll. On trade the OECD
commented that not only cyclical but also structural factors are causing a slowdown in the
rate at which value chains are integrating across countries. Global growth is projected to be
2.9% in 2023. It then weakens to 2.7% in 2024 and is forecast to rebound modestly to 3.0%
in 2025.
China
The IMF has upgraded its economic outlook for China following stronger than
expected growth in the third quarter of this year and recently announced new policy
support, namely the approval of a 1 trillion-yuan sovereign bond issue and allowing local
governments to frontload part of their 2024 bond quotas. Compared to the IMF’s World
Economic Outlook published in October, China’s GDP growth in 2023 is raised from 5.0% to
5.4% while GDP growth in 2024 is raised from 4.2% to 4.6%. The IMF noted that continued
weakness in the property sector and subdued external demand could restrict growth
prospects in 2024.
Steel
WSA – The latest October 2023 crude steel production data from the World Steel
Association had global output across 71 reporting countries at 150.0 million tonnes, up 0.6%
compared to October 2022. Chinese output for the month was reported as 79.1 million
tonnes, down 1.8% year-on-year.
Train drivers working for BHP’s Western Australian iron ore division are
taking ‘restrained’ industrial action after rejecting an offer from the company.
China has reportedly added 50 million tonnes of iron ore concentrate capacity this year and
has pledged to increase domestic concentrate supply from 286 million tonnes in 2022 to
370 million tonnes by 2025.
The Chinese government has so far refrained from issuing steel output curbs for the
remainder of this year. One result has been a jump in steel exports. Customs data for the
first ten months of 2023 shows exports up nearly 35% year-on-year at 19.29 million tonnes,
the highest level since 2016.
The German Steel Federation reported that in the first ten months of 2023
crude steel production fell by 4.1 % year-on-year to 30.11 million tonnes.
Over the same period, EAF-based production fell by 12.9% to 8.4 million tonnes while blast-furnaced-based production fell by just 0.2% to 21.7 million tonnes reflecting the high energy price burdenfaced by EAF producers.
POWER COAL FORECASTS
WCA – The World Coal Association has rebranded itself as FutureCoal – The Global Alliance
for Sustainable Coal to counter ‘anti-coal’ sentiment.
WORLD BANK – The World Bank’s latest Commodity Markets Outlook forecasts that coal
prices will continue a downward trend on rising supply and weakening demand as coal
consumption continues to be displaced in power generation and industry. Its benchmark
average Australian coal price is expected to fall by 25.7% in 2024 and by a further fall of
15.4% in 2025.
INDIA – India’s coal ministry reported that the country’s coal production in October totalled
78.65 million tonnes, up 18.6% year-on-year. In a separate report, the coal ministry laid out
plans for a major boost in domestic coal production from the current level of around 1000
million tonnes/year to 1404 million tonnes by 2027 and 1577 million tonnes by 2030. India
is planning to add 80 GW of coal-fired power generation by 2030.
AGRIBULK FORECASTS
– The UN’s Food and Agriculture Organisation’s world food price index declined moderately
in October averaging 120.6 points, down 0.5% from the previous month and down 10.9%
year-on-year. This was helped by the sugar index falling 2.2% from September but it was still
up 46.6% compared to a year earlier.
PANAMA CANAL – The Panama Canal Authority announced that it was cutting booking
slots to 25 per day starting November 3 from an already reduced 31 per day due to a
continuing severe drought. The PCA also advised that that slots will be gradually reduced
over the following three months to just 18 per day from the start of February 2024. These
restrictions are causing some US Gulf grain shipments to Asia being rerouted via the Suez
Canal or Cape of Good Hope adding to voyage distance and vessel demand.
FERTILISER FORECASTS
BRAZIL – Brazil’s state-run oil company Petrobras is returning to the fertiliser sector. The
company has laid out its 2024-2028 strategic plan which includes new investments in
fertilisers and renewable energy with the CEO noting that green fertilisers will be products
of the future. By the end of 2024, Petrobras will resume operations at one fertiliser plant
and is set to complete construction of a second plant by 2028. The company will also work
with firms that it leased two other fertiliser plants to, helping them to regain profitability.
CANADA – The industry group Fertilizer Canada expressed its relief that the strike that
closed St Lawrence Seaway on October 22 ended with a reopening on October 30 allowing
the resumption of fertiliser imports in preparation for spring planting.
MOROCCO – The phosphate producer OCP was reported to have loaded 100,000 tonnes
of fertiliser in a Mini-Cape, apparently the first time that a Cape has hauled such a cargo.
The Patrica Oldendorff departed the port of Jorf Lasfar on 1 November headed for India.
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