In 2013 Chinese seaborne imports reached two billion tonnes, making it the world’s biggest seaborne importer. Europe’s imports had briefly edged up to 2.1 billion tonnes in 2005, but after the 2008 Credit Crisis they fell back to around 1.8 billion tonnes. Meanwhile China produced its most aggressive growth surge yet, doubling its imports, from 1.0 billion tonnes in 2008 to 2.1 tonnes in 2013.
Hitting the BIG time
It is now 10 years since Chinese iron ore importers hit the dry bulk market. In 2003 China imported 500mt of cargo and steel production was only 221mt. Forecasters, including the Chinese government, predicted that steel production would reach 300mt in 2010, a number which looked am-bitious compared with the historic growth rates in European and Japa-nese steel. But by 2010 China’s steel production was 627mt (and an estimated 779mt in 2013). This is twice the forecast and a warning of the difficulty of predicting the trade of an economy with 1.4 billion people.
That seemingly unrepeatable surprise turned out to be just the beginning. Unbelievably, in the 5 years after the Credit Crisis China’s imports accelerated. A massive leap of 370mt in 2009, as the govern-ment fired up the economy, was followed by 105mt growth in 2010 and close to 200mt a year since then. Since China’s imports of 1.4 tonnes per person are still way below Europe’s 4 tonnes per capita, who knows where it will end?
Dry Bulk Domination
Dry bulk commodities continue to dominate Chinese imports, ac-counting for 74% in 2013. Although iron ore now accounts for 39% of imports, over the last 5 years the range of commodities has widened. In the lead is coal which grew from 39mt in 2008 to 302mt in 2013, overtaking oil to become the biggest energy import (by weight). Minor ores are another big grower since the Credit Crisis. In 2006 imports were only 35mt, but they reached 196mt in 2013. Alt-hough some of these cargoes are short-haul, they have broadened China’s demand for bulkcarriers, especially the surging Supramax fleet.
Future Growth – Expect Surprises
Looking ahead, these trends are quite encouraging for bulker owners. Steel is bound to stabilise at some stage, but recent developments suggests that for an economy like China, slower GDP growth can still suck in more and more dry bulk cargo. Of course that’s not a novel development, it happened to Europe, but it’s encouraging to see the range of imports widening as the economy matures.
Wild Horses, Busy Ships
So there you have it. China made the shipping industry rich in the 2000s, a great gift. But an even greater gift has been the extra billion tonnes of cargo since the Credit Crisis. Without it, shipping would be a much sadder place today. So maybe now’s the time to raise a glass to China and drink a toast to an easy passage for China’s next billion tonnes. Have a nice day.