In Dry Bulk Market,International Shipping News 31/08/2016
EU seaborne steam coal imports have been in steady decline in recent years, falling 12% between 2012 and 2015. This accelerated to a 25% y-o-y drop to 52mt in January-May 2016, due to strict environmental policies and competition from gas. Looking forward, European coal-fired power generation is expected to remain under sustained pressure, with steam coal shipments into the EU projected to drop 16% to 108mt in 2016.
Source: Clarksons
The EU is an important region for dry bulk trade, accounting for 9% of global seaborne dry bulk imports and 10% of global grain exports in 2015. Concerns over economic turbulence in Europe have heightened following the ‘Brexit’ referendum result in June 2016. Yet, a close look at recent trends indicates that EU dry bulk imports have already been under pressure for some time.
Thermal Coal Imports Cooling
Coking Coal Losing Its Fizz
Furthermore, EU coking coal imports have fallen consistently since 2011 and dropped 17% y-o-y to 14mt in January-May 2016, reflecting pressure on steel mills in the region. EU steel output dropped 6% y-o-y in 1H 2016, amidst an influx of Chinese steel products imports and depressed global steel price levels. EU seaborne coking coal imports are projected to drop 12% to 33mt in 2016.
Iron Ore Imports Easing
Meanwhile, EU seaborne iron ore imports have also been hit by the flood of Chinese steel products exports, which triggered several mill closures. Shipments of iron ore into the EU fell 4% to 111mt in 2015, before easing a further 1% y-o-y in January-May 2016. Given the difficult steel market conditions, iron ore shipments into the EU are projected to drop 4% to a seven year low of 106mt in 2016.
Minor Miracle, Or False Friend?
Conversely, estimated EU seaborne minor bulk imports, including cargoes such as steel products and bauxite, have recorded consistent growth in recent years. In 2015, minor bulk imports into the region rose 4% y-o-y to a record 123mt. However, 94% of this growth was driven by steel products imports, which rose 24% y-o-y to 23mt, but also displaced coking coal and iron ore imports into the region. Nevertheless, in its own regard, minor bulk provides a rare source of continuous growth for EU dry bulk trade.
Grain Exports Hampered
Finally, EU grain exports doubled between 2012-15 to reach 46mt, supported by import growth in North Africa and the Middle East. However, poor weather conditions and increasing competition from farmers in the Black Sea region saw EU grain exports drop 5% y-o-y to 22mt in the first five months of 2016.
So, while the ‘Brexit’ result in June 2016 fuelled concerns of economic uncertainty in the EU, seaborne dry bulk trade in the region has already been under pressure for some time. Total seaborne EU dry bulk imports fell 4% in 2015 and at the same rate in January-May 2016, due to a range of market pressures. Overall, given potential additional pressures from ‘Brexit’, the outlook for the region’s dry bulk trade growth appears challenging.
