Dark clouds are gathering again on the dry bulk market as analysts say Indonesian coal production could fall by a fifth and that dry bulk trade could only grow by 4.2% this year.
“After collecting data from about 90 ports and terminals covering more than 80% of global trade in coal and iron ore, we now expect the dry bulk trade to grow by 4.2% for 2015, mostly explained by an 8% rise in iron ore trade,” said Nicolay Dyvik, Oyvind Berle and Petter Haugen, shipping analysts at DNB Markets in Oslo.
“Survey respondents seem too optimistic, again. Our estimates are significantly below those held by the respondents to our survey, who expect the trade in coal and iron ore to grow by 10% in 2015, 7% in 2016 and another 7% in 2017 (versus our 5%, 5%, and 4%, respectively),” they said in a market report emailed to IHS Maritime.
The analysts said in all three previous surveys they had carried out, that the respondents had expected higher growth than what would actually materialise.
They said that the post 2012 wave of trade growth in dry bulk has not been driven by demand but by excessive supply, which came too late to the party, as mining companies have had no other option than to maximise production as a consequence of massive capital expenditure to increase production decided before the financial crisis.
However, on a brighter note, scrapping of dry bulk carriers has reached record high levels of 21 million dwt and new ordering is down 93% year to date. “We now see average annual fleet growth of circa 4% and demand growth of circa 5%,” they said.
Meanwhile, Erik Nikolai Stavseth and Kurt Waldeland, shipping analysts at Arctic in Oslo, said the devaluation of the Chinese currency has increased the prospects that Indonesian coal output is expected to drop below 400 million tonnes in 2015 from some 500 million tonnes in 2014.
“While demand from China in 1H15 suggest steam coal imports in the range of 120 million to 130 million tonnes in 2015 (versus the high of about 250 million tonnes in 2013), Indian demand for Indonesian coal has not been strong enough to pick up the slack from China. But we do expect Indian coal demand to continue growing whereas Chinese steam coal imports are, on our numbers, set to decline 25% year on year to about 160 million tonnes in 2015 (implying a pick-up in imports in 2H15),” they said in a market report emailed to IHS Maritime.
This post was sourced from IHS Maritime 360: View the original article here.