Potential trade restraints emerging

Although supportive features are visible, commodity import demand during this year could experience sizeable elements of weakness. The likely combination of changes in 2024 suggests potential for limited or no growth in world seaborne dry bulk trade.

The global macroeconomic background for dry bulk trade is not expected to prove especially beneficial. Estimates by the OECD organization published a few weeks ago showed global gross domestic product growth edging downwards from 3.1% in 2023 to 2.9% this year. China’s growth rate after improving to 5.2% last year is predicted to decelerate by a half percentage point to 4.7%. In other large import demand centres such as Japan and the European Union trends may remain sluggish.

GRAIN & SOYA

Prospects for global grain trade in the current 2023/24 marketing year ending third quarter 2024 are broadly positive. Recently updated US Department of Agriculture forecasts point to world trade in wheat, plus corn and other coarse grains increasing by about 18mt (million tonnes) or 4% to reach a record 440mt, more than reversing a downturn in the previous period.

Predictions for the main importing areas are shown in table 1, combining wheat in a July/June year and coarse grains in an October/September year. Most of the main regions are expected to see larger volumes imported, the main exception being the European Union where a small reduction is envisaged. Bigger purchases by countries in east and southeast Asia, and north and subSaharan Africa, could boost the total.

Coal

After last year’s robust expansion of world coal trade there is an absence of firm signs indicating how this improvement can be sustained. Downwards pressures in many countries have become prominent, reflecting the widespread pattern of reducing fossil fuel use and shifting towards renewable energy sources amid decarbonization efforts.

In 2023 China’s massive expansion of coal imports more than offset a net decrease in volumes received by all other countries together. The China seaborne imports volume is estimated to have reached over 370mt, an increase of about 130mt or more than half compared with about 240mt in the previous year. During 2024 some of this boost may be reversed. Among other top importers such as India, Japan and Korea growth may be restrained while the EU’s purchases may be flat.

Iron Ore

Clearer signs of how seaborne trade in the principal steel industry raw materials — iron ore and coking coal — could change in the current year are still awaited. A tentative appraisal points to a flat outcome in 2024 as a whole although, in the iron ore segment, potential restraints are evident, perhaps resulting in a downturn.

The greatest uncertainty surrounds China’s iron ore imports, comprising three-quarters of world seaborne iron ore trade, after these grew by 74mt (7%) to reach 1,182mt last year. Convincing indications of further growth in 2024 have not emerged.

Amid envisaged slowing growth in the Chinese economy and ongoing difficulties in sustaining activity in the substantial steel-consuming property sector, steel production and ore imports seem unlikely to continue advancing.

Minor Bulks

Estimates of seaborne trade in the huge but diverse minor bulk trades segment suggest that growth of about 2% was achieved last year, raising the total to over 2,100mt based on Clarksons Research data. Several indications of a continued upwards trend in 2024 have emerged.

Bulk Carrier Fleet

Enlargement of the world fleet of bulk carriers in 2023 was similar to that seen in the preceding year, at 3%, as shown in table 2. At the end of last year capacity reached 1,003 million deadweight tonnes. This year newbuilding deliveries may be fairly steady, possibly accompanied by higher scrapping, resulting in the fleet growth rate decreasing slightly towards 2.5%.

Global Experts At A Truly International Event That Connects Policymakers And Business Operators

Across The Entire Grains Value Chain

The 2024 IGC Grains Conference, scheduled 11–12 June 2024, will bring together more than 400 international industry leaders from across the entire supply chain to explore both the challenges and opportunities surrounding grains, oilseeds, pulses and rice markets. The conversation will be shaped by presentations from around 60 recognized expert speakers. Against the backdrop of an increasingly volatile trading environment, an open and extensive dialogue between all stakeholders is more than ever necessary.

With its focus on the significance of trade for food security, the IGC Grains Conference 2024 will provide a platform for policymakers and industry leaders to engage in meaningful discussions surrounding key challenges in relation to climate change, protectionism, technological advances, as well as trade finance.

A special geographical focus will assess emerging trends and business opportunities in the grains and oilseeds sectors of Central Asia.

The event will also comprise a number of commodity-specific workshops, covering topical issues affecting markets for grains, rice, oilseeds, pulses and related sectors.

This will provide the perfect opportunity for commercial people to assess respective outlooks for world production and trade in 2024/25.

Alongside those held by the GAFTA, the IGTC and the AHDB, The IGC Grains Conference is part of a series of related industry events under the banner “London Grains Week”, staged in June of each year.

Iron ore prices set for steep drop

Experts are predicting a sharp fall in iron ore prices, following the crash in prices for lithium and nickel.

Concerns about falling demand from China, combined with questions over demand for Australia’s largest export and an imminent surge in supply, could result in a price of US$80 per tonne, a fall of over 30% from the current level of over US$120 per tonne.

New supplies from Africa’s Simandou region, and slowing demand from China, suggest that the market could be showing signs of saturation.

Major iron ore companies are already showing some instability due to the 45% fall in the nickel price, with BHP’s share price falling by 13% in 2024, with Rio Tinto 10% lower and Fortescue down 5%.

Markets must avoid complacency, and work to reposition themselves to avoid ‘potential carnage’, say pundits.

There is some cause for optimism, with the Commonwealth Bank believing that there is a realistic prospect of additional stimulus in China, particularly via infrastructure investment.

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