A) PROYECTOS DE INNOVACIÓN DOCENTE [1]
III. 2. CURSOS DE FORMACIÓN (DOCENCIA E INVESTIGACIÓN) [1]
When studying the dry-bulk market and comparing this sector to the con-tainer sector, the challenges are very diff erent, as seen from a commercial per-spective, but yet relatively similar from a methodological forecasting analysis perspective. When analyzing the demand side of the dry-bulk sector, there are four major commodities to understand. First, iron ore and coal are the two most important cargos for the dry-bulk market. For steel production, iron ore and coking coal are the most important ingredients, and steel is used in construction as well as in manufacturing processes across the world.
Second, thermal coal is used in power generation. Th ird, grain cargo is highly dependent on population growth, fi nding use as a feedstock and for human
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Ulisaon Rate Index, History Ulisaon Rate Index, Basis Scenario Clarkson TC-rate index
Ulisaon Rate Development Index (MA)
Fig. 2.13 Container market outlook: trend indicator ( Source : Own modeling (moving average of the development in the utilization rate indexed with 1996 = 100))
consumption, though traded more regionally due to its perishable nature.
Th erefore, it cannot be considered either as a driver of total dry-bulk tonnage demand or a determinant of changes in trade distances, which are rather con-stant over time. Finally, part of the dry-bulk cargo also constitutes the minor bulk commodities, 16 which are correlated to industrial growth via their use in construction, the automobile industry and infrastructure development.
During 2014, seaborne trade of iron ore accounted for 31.5% of the total dry-bulk trade, coal accounted for 28.7%, grains for 10.1% and minor bulks for 29.7%. 17 However, the key growth driver amongst the dry-bulk com-modities, for the last decade, has been iron ore imports into China for steel production. Th e continuous focus on developing the Chinese infrastructure and urbanization during the last decade has led to a strong increase in the demand for steel products and ingredients, which, for the dry-bulk trade, can be translated into a particularly strong demand for iron ore imports. China’s domestic iron ore is of lower quality and therefore not preferable for steel production. Imports, especially from Brazil, Australia and Canada, where the quality of the iron ore is higher, have therefore been preferred and are increas-ing. Th is is also generating longer trade distances and therefore stronger growth in the total demand for dry-bulk tonnage, when adding the ton-mile eff ect. During the fi nancial crisis from 2008 onwards, a number of countries implemented fi nancial packages, including China’s CNY4 trillion stimulus package. A number of these packages targeted infrastructure development projects, leading to a boost in demand for steel ingredients, such as iron ore and coal, leading thus to a stronger growth of demand for iron ore imports.
One could therefore argue that the fi nancial crisis has been benefi cial for the overall dry-bulk tonnage demand. One could defi nitely argue that the dry- bulk sector has been spoiled with strong tonnage demand growth during the decade 2004–14, with annual growth rates between 4 and 14%, showing a decline not before 2009 to a growth rate of 2.4%. 18
Iron ore consumption has been on a general uptrend since the turn of this century and, even more importantly for dry-bulk tonnage demand, the share, which is seaborne traded, has continued to increase. Even in 2009, when global iron ore consumption fell, mainly due to reduced steel production in the Western world, Chinese iron ore imports helped maintain the momen-tum in seaborne trade. Th is was primarily driven by the stimulus package targeting infrastructure-development projects requiring steel; for instance, the expansion of the railway network. In 2012, global seaborne imports of iron ore accounted for slightly more than half of the global iron ore consumption (56.1% in 2013), and it can be expected that this trend will continue to increase in the coming years, with seaborne trade estimated to reach close to 65% of
global iron ore consumption by the end of 2015. Th is growth is primarily driven by China sourcing iron ore imports from further distances, especially Australia and Brazil. When studying iron ore trade, Brazil and Australia are expected to remain the dominant suppliers of iron ore to China. Currently, China imports about 50% of its requirements from Australia while another 25% is sourced from Brazil. In the coming years, the share of Chinese imports from Australia is expected to grow and reach about 55% while imports from Brazil are estimated to decline to about 20%. With almost 70% of globally seaborne traded iron ore imported by China, the expected slowdown in steel production in China will have a huge impact on the iron ore trade and there-fore on the total dry-bulk tonnage demand growth. 19 , 20
Similar to iron ore, coal consumption has been on an uptrend, driven by the increasing demand for electricity and steel, though the growth in seaborne trade has been complex and characterized by its not being a one-way street.
Th is is primarily because China has the world’s third largest coal reserves, and only in 2009 turned into a net coal importer. 21 Furthermore, Chinese imports are mainly driven by price-arbitrage opportunities between the domestic and international market and therefore are relatively diffi cult to forecast. On the other hand, India will continue to import coal to meet the demands of its energy sector, and the use of alternative, more eco-friendly energy sources is not expected either in the short or in the medium term. Overall, seaborne coal trade accounted for about 38% of global coal consumption in 2012, and this is expected to increase to about 40% by the end of 2015. Australia and Indonesia are the biggest coal exporters, followed by South Africa and Colombia. With its shale gas boom, the USA has also become a key exporter.
Th e major change in the coal trade that could be expected from 2015 is the Colombian coal exports to be directed toward Asian markets instead of the USA. Th is trade will be further aided by the expanded Panama Canal, which will boost the ton-mile and therefore total tonnage demand.
When studying the demand side of the dry-bulk sector, it is essential to understand the key commodities and the various demand drivers for these.
For instance, it is important to study the current Chinese fi ve-year plan and translate it into infrastructure projects, thence forecasting future demand for steel and related demand for imports of iron ore. It is also important to analyze where it is sourced from and whether to expect changes in future trade pat-terns and the sourcing countries’ share of the iron ore exports. Furthermore, it is important to consider whether one of the key drivers for coal—India—
will continue to show strong growth rates in demand for coal imports for the energy sector, not only in the short and medium term, but also in the longer term, or whether the move toward alternative energy sources could accelerate.
Th ere is no doubt that, when studying the historical development of the dry-bulk tonnage-demand growth, one cannot blame the world economy for the current low dry-bulk market. Th e dry-bulk demand side has shown stable strong growth for tonnage since the turn of the century. However, the problem has come from the strong growth in supply exceeding the growth in demand for tonnage leading to the mismatch in the demand supply bal-ance. Th is has led to the current situation of excess supply that needs to be absorbed into the fl eet before a fundamentally supported rebound occurs.
When taking into account the massive order book for delivery in the full year 2015 and especially 2016, with fl eet growth of, respectively, 6.7 and 7.2%, compared with an expected dry-bulk tonnage demand of around 4%
in both 2015 and 2016, the depressed markets with excess supply are expected to continue for at least two more years, as illustrated in Fig. 2.14 . Th e dry- bulk market is also characterized by seasonality, which is sometimes confused with cyclicality, and accordingly market players have been placing orders for new vessels on expectations of a change in market conditions. When deliv-ered, these orders then put further pressure on the already excessively supplied market and counter a rebound in itself. Such a situation occurred in autumn 2013 when the seasonal upswing triggered a massive ordering activity, which resulted in the massive order book for delivery in 2015 and 2016.
In Fig. 2.14 , the utilization rate development index for the dry-bulk mar-ket is illustrated. It is calculated as the development in the diff erence (or the ratio) between the forecast capacity of the fl eet and the forecast total demand
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Ulisaon Rate Development Index (MA) Balc Dry Index
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Fig. 2.14 Dry-bulk market outlook: trend indicator, demand–supply modeling ( Source : Own modeling (moving average of the development in the utilization rate, indexed with 1996 = 100))
for seaborne dry-bulk tonnage. Total demand for seaborne dry-bulk tonnage, including a slowdown in the expected future growth of imports of iron ore into China as well as continued strong growth of coal imports into India, is implemented in the global bilateral country-by-country trade and aggregated to a global demand for tonnage, including expected changes in trade distances and changes in the annual average speed and congestion. Furthermore, future expected scrapping activity and shipbuilding contracting activity (includ-ing the forecast(includ-ing of the delivery profi le calculated on the basis of shipyard capacity and shipyard utilization) is translated into a fl eet growth and com-pared with the total tonnage demand, leading to the above trend indicator.
Th us, expectations are for the dry-bulk market to remain suppressed for at least another two years before a fundamentally supported rebound can occur.
Seasonality and volatility throughout the years is expected, however.