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This month marks the 25th anniversary of the publication of the very first edition of Shipping Intelligence Weekly. So, this week we take a look back to 1992 and compare the shipping industry then to its profile today. If this reveals anything it’s that whilst many things change dramatically, in an industry like this some things don’t appear to change too much at all…

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Wonderful World Of Trade

Seaborne trade provides the platform upon which the shipping industry operates. Back in 1992 world seaborne trade stood at an estimated 4.6 billion tonnes and in comparison current projections suggest that in 2017 it will reach 11.3 billion tonnes. That’s 2.5 times bigger than 25 years ago (see table). Iron ore trade is projected to be 4.3 times larger than back in 1992, LNG trade 4.5 times larger and container trade a mighty 6.3 times more voluminous. The 2017 seaborne trade estimate represents about 1.5 tonnes per person on the planet. That’s quite some performance all round and keeps the world of shipping turning.

My How Big You’ve Grown

Meanwhile, shipping capacity has also expanded equally rapidly. The fleet has grown by a multiple a little greater than that registered by trade over the 25 year period. At the start of 2017 the global fleet totalled 1.86 billion dwt compared to 621 million dwt at the start of 1992. That’s a multiple of 3.0 times larger. Of course, over the period there have been changes to vessel productivity, not in the least the moderation of service speeds in many sectors in the post-Lehman downturn.

What Things Cost These Days

Alongside these significant changes, the value of shipping assets has seen more mixed trends. A 5 year old VLCC was 8% cheaper at the start of 2017 (in current terms) than at the start of 1992 but such is the state of play in the bulkcarrier market that a 5 year old Capesize is 43% cheaper. Adjust these for inflation and the values look even lower. On the other hand the scrap value of ships is higher than in 1992 on the back of an 81% higher $/ldt ship steel scrap price.

Economic Activity

Despite the recent commodity price downturn, raw materials overall are substantially more expensive than back in 1992.  Brent crude stood at $54.8/bbl at the start of 2017 compared to $18.2/bbl in early 1992 and iron ore at $76.3/tonne compared to $33.1/tonne. Bunker prices (380cst Rotterdam) have increased from $69.0/tonne to $312.5/tonne.

Elsewhere only $1.24 of shipping’s universal currency is now needed to buy one pound sterling, compared to $1.83 back in 1992, but USD borrowing (6-month LIBOR) is much less dear at 1.3% rather than 4.2%. The world economy is still growing more quickly than back in 1992, projected at 3.4% in 2017 compared to 2.3%, and is over 3 times bigger at about $79 trillion. The size of the Chinese economy has rocketed from $0.5 trillion to $12.4 trillion, and the world’s population has expanded from 5.5 to 7.4 billion.

Nothing Changes?

Last of all, some things never seem to change. At the start of 1992 the ClarkSea Index of vessel earnings stood at $11,700/day. At the start of 2017 it stood just 5.2% lower at a remarkably similar $11,092/day. In between the index once tipped over $50,000/day; that’s a cyclical business for you! Now let’s see what changes the next 25 years throw up. Many happy returns SIW!

In the world of seaborne trade, distance forms a crucial element in terms of determining how much demand for vessel capacity is created by trade volumes. One interesting measure of this is the estimated average haul of global seaborne trade. However, since the turn of the millennium, the historical trend isn’t quite as easy to follow as one might imagine.

Back Where We Started?

Across the period 2000-15, estimated global seaborne trade increased by 70% from 6.4bn tonnes to 10.8bn tonnes. Over the same 15-year period, the total in terms of tonne-miles jumped 71% from around 31,300 to 53,500 billion tonne-miles. As a result of these very similar growth rates, the ‘average haul’ of each tonne of seaborne trade didn’t move too much across the period as a whole, inching up from 4,926 to 4,944 miles. That’s on average an upward trend of just 1.3 miles per year! However, through this period there were clearly elements of seaborne trade which were being stretched, but others where the average haul was shrinking.

Down Then Up, And Again!

In 2000-02 the overall average haul declined. Crude trade volumes were falling, particularly on some of the longer-haul trades from the Middle East and West Africa. The average haul of dry bulk trade was declining with a firm rise in  Australia-Far East coal volumes. In containers, the fastest growth was being seen on some of the intra-regional trades. However, in 2003-06, average haul rose again, almost back to 2000 levels, with firm increases in the average haul of iron ore and grain trade on the back of growing exports from the Americas to the Far East.

Then, in 2007-09 things turned again and average haul headed downwards once more. This included a drop in the average haul of coal trade on the back of a rise in short-haul Asian imports. The average haul of container cargoes also fell in 2007-08, partly driven by a strong increase in short-haul intra-Asian trade. Finally, in 2010-15 overall average haul increased once again, with a firm rise in the average haul of crude oil, underpinned by Chinese import growth, leaving us almost exactly back where we started in 2000.

Tonnes And Tonnes

So, across the whole of seaborne trade, the statistics actually tell us that it’s the expansion in volumes which has accounted for the lion’s share of the additional seaborne tonne-miles in the last 15 years. But trade patterns in individual cargo types do change, and no-one should rule out the possible impact of new longer trades; there are still parts of the global trade matrix to fill out further.

No Surprises?

However, so far this century, despite short-term fluctuations, average haul has not really changed too much. Maybe we shouldn’t be too surprised given the relatively fixed origin of many of the commodities moved by sea? The recent trend is upwards, but intra-regional trading blocs are becoming more cemented. Perhaps the best approach is to follow the advice of many a wise shipowner in challenging times: keep the cargo moving (and don’t worry about how far it’s going!).

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Generally, shipping industry watchers spend much of their time monitoring events out to sea: how fleets are evolving, trade volumes growing and freight rates performing. But occasionally it can be worth pointing the telescope in the other direction, and spending time considering how events on land can affect the industry. One such major land-based change has been the development of US shale oil and gas.

What No-One Saw Coming

Back in 2009, few would have dared predict that new fracking technologies would allow the US to add 10m boepd of unconventional output across a five year period. This is roughly the same net volume as was added to global offshore output between 2000 and 2015. The offshore markets have been amongst the hardest hit by the oversupply, and cuts in investment will make it harder to add to the 46.9m boepd set to be produced offshore globally in 2016. Since the oil price slump, rig rates have dropped by more than 50%, OSV rates by more than 35%, and today more than 300 rigs and 1,400 OSVs are laid up.

Shale In The Sights

One of the main factors which helped shale fracking to become widespread was the rapid recovery of the oil price after the 2009 downturn. This, of course, also helped the offshore sector have its day in the sun, before the downturn. But shale’s growth also had an impact on other shipping segments. US LPG exports grew at a CAGR of 71% in 2010-15. The growth of shale gas even led to proposals for the first transatlantic exports of ethane derived from it, and orders for ‘VLECs’ vessels followed.

The rise of shale gas also changed the LNG trade fundamentally. In 2010, US LNG imports were expected to be a major growth area. Today, the US has 117mt of under-utilised LNG import infrastructure (imports were just 1.86mt in 2015). Some projects have been converted to liquefaction, and up to 250mt of export capacity was mooted. One new project, Sabine Pass, is now exporting.

Telescoping Tank Capacity

Growth of US shale substantially reduced US import demand for light crudes. This primarily affected imports from West Africa. The transatlantic trade on Suezmaxes and Aframaxes fell from 1.8m bpd in 2010 to 0.3m bpd in 2014. But a 1975 ban on US crude exports prevented tanker exports of surplus oil, much of which is light grades for which US refineries were not ideally configured. US Jones Act tankers and tank barges benefited, as limited fleet supply for upcoast voyages sent coastal timecharter rates as high as $140,000/day in mid-2015, but there was no similar effect on international trade.

The US government has now eased the export restrictions, but this has come as lower oil prices have hit the rig count and output onshore. The lower oil price has caused shale to go into decline. Yet it has provided a nice boost for tanker trades, as low oil prices have stimulated oil demand from transportation and industry.

So, developments in the mid-west of America have had major ramifications for energy shipping and offshore markets globally. This is set to continue as the industry waits to see how shale responds to the slight oil price gain over Q2 2016. This only goes to demonstrate the need to keep this related land-based industry under surveillance. Have a nice day.

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Motoring terminology has always provided shipping analysts with a wide range of vocabulary to use when describing the car carrier sector. Last year demand growth appeared to have stalled, and the indicators suggest that there hasn’t been a significant acceleration this year. With the market improvements seen back in late 2013 now seemingly eroded, what are the signs on the road today?

Trade Growth Stalling

In some ways the signals are quite clear. The road has hardly been smooth for seaborne car trade in recent years. Volumes have yet to surpass the record level of an estimated 28.5m cars in 2007, with total trade in 2015 expected to total 26.7m cars. Trade fell by more than 30% in 2009, and while volumes have recovered to some extent, and increased by a helpful 4-6% per annum in 2011-13, growth in 2014 ground to a halt. Relocation of car production limited shipments from key Asian exporters, while imports into a number of key and emerging regions were affected by economic and political disruptions.

Similar trends have imposed a ‘speed limit’ on car trade growth this year, with volumes only on track to increase by around 1% in 2015. Strong car sales in the US and Europe have helped to drive some growth, but continued expansion of vehicle output close to major and developing demand centres, combined with economic difficulties significantly limiting imports into China, Brazil and Russia, has prevented further acceleration.

Down In A Low Gear

Meanwhile, growth in the PCC (Pure Car Carrier, including Pure Car & Truck Carrier) fleet has also decelerated in recent years, easing from 5% in capacity terms in 2013 to 2% in 2014. While the majority of car carriers operate under long-term agreements, the market is still impacted by supply and demand trends, and the slowdown in fleet growth appears, with demand looking lacklustre, to have been insufficient to prevent weaker fundamentals. Charter rates for a 6,500 ceu PCTC had improved in late 2013 and into 2014, topping $26,000/day in mid-2014. However they have since come under pressure and sentiment has become more negative during 2015.

Alternative Routes?

On the investment side, however, the indicators might be suggesting something else. Following limited ordering of new car carrier capacity in 2014, owners have put their foot down and in the first ten months of 2015 ordered units of 0.25m car equivalent capacity, more than in six of the last seven years. Replacement demand appears to have driven much of this, but there has been plenty of activity at the top end of the size range, so clearly some owners still think ‘big is beautiful’ and that the road ahead seems clear.

The Traffic Report

So, the car carrier sector may have hit a rather big jam. But down another road, there’s still plenty of traffic flow. Slow lane or fast, this all needs further examination, and each year, in our Car Carrier Trade & Transport report, we look at the trends in detail. This year’s report is available on the Shipping Intelligence Network now. Have a nice day.

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In the 1989 film Back to the Future II, Marty McFly and Doc Brown travelled forwards in time to 21st October 2015. While the film’s view of future technology has in many cases proved surprisingly accurate, today’s lack of hoverboards, flying cars and pizza hydrators suggests some were way off the mark. Such mixed success will likely seem very familiar to anyone attempting shipping market predictions today.

This Is Heavy, Doc

It is well documented that the incredible volatility in the shipping markets makes them very difficult to predict, even to seasoned market watchers, and so it can often be easier to try to predict the fundamentals. While Back to the Future II successfully predicted the broad trend towards the more widespread role of technology in everyday life, even the ‘big picture’ macro trends in the shipping industry can be hard to get totally right.

Not much seems ‘bigger picture’ than the world economy, and here forecasters have certainly revised their opinions over time. Taking the IMF’s views as a reasonable benchmark, it is clear how the projection for world economic growth in 2015 has moderated, from 4.0% in April 2014 to 3.1% in October 2015, as the outlook for global expansion has softened. The world also notoriously got it wrong on the oil price outlook. Throughout much of 2014, most expectations for oil prices in 2015 were for an average of above $100/bbl. But the crash in prices in late 2014 led to a major adjustment in future expectations, with most forecasters now projecting average prices in full year 2015 of around $60/bbl or below.

Time Circuits, On!

Pinning down forecasts for the big shipping aggregates can also be hard. Views of world seaborne trade in 2015 have recently changed significantly. In early 2015, the expectation for growth this year was 4.0%. However, following dramatic changes in imports of coal and iron ore into China, as well as a gradually more depressed outlook for container trade, the latest forecast for world seaborne trade growth in 2015 stands at 2.5%.

Speeding Up To 88mph

Even on the supply side, it can be hard to forecast with absolute precision. In early 2014, the estimate for growth in the world cargo fleet in 2015 (in terms of GT) stood at 3.5%. In early 2015, this rose to 4.2% as the likely outlook for deliveries and demolition changed, but with scrapping accelerating and then slowing again the outlook has changed once more. Today, the projection for growth in the cargo fleet is 3.9%, hopefully a fairly accurate figure with three-quarters of the year gone.

You Mean We’re In The Future?

So, what does this all tell us? Macroeconomic trends are notoriously hard to predict. Today, with the consensus outlook increasingly fragmented, the margin of error in forecasting seaborne demand is also significant. And even then the supply side can be tricky to pinpoint too. So, while forecasts of the fundamental balance do provide a helpful indication of expectations for future market trends, these should always be handled with caution. Marty and Doc might well be amongst the first to agree that the future doesn’t always turn out how you might expect. Have a nice day.

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Analysts are busy updating their models for the new US budget year. If the big picture for tankers and bulkcarriers is what interests you, it’s not enormously complicated. Everyone uses roughly the same information, and data for running supply-demand balances is readily available. Of course it’s a complex world, but one conclusion is recurrent – overall, there’s still plenty of surplus shipping capacity.

Same Surplus, Different Rates

The fundamentals have not changed much over the summer. Comparing ‘raw’ supply and demand figures, both the tanker and bulker sectors appear to have a surplus of around 25%. These are the same numbers that have been cropping up for a while. But earnings statistics tell a different story. Over the last year tanker earnings averaged $29,000/day (VLCCs $50,000, Suezmaxes $43,000 and Aframaxes $35,000). But bulkers only managed $8,000/day (Capesizes $11,000, Panamaxes $8,000 and Supramaxes about $7,600). If both markets have 20-30% surplus capacity, what’s going on?

Could the statistics be wrong? It’s possible but it’s hard to see how. In tankers, for example, 2015 seaborne oil imports are only 6% higher than in 2008 but the tanker fleet is 33% bigger. These statistics are fairly easily verified. Bulk trade is up 38% since 2008, but the fleet has grown 93%. There may be some extra tonne-miles, but not enough to change the conclusion that both markets are carrying a lot of surplus ships.

A Slow Moving Mystery

Another possibility is our old friend ‘slow steaming’. Maybe tanker owners are getting smarter. The tanker fleet trading at 15 knots carries around 25-30% more cargo than at 11-12 knots. Supply-demand calculations are usually based on a ‘design’ speed, say 15 knots. So if the fleet trades at 11 knots, the ‘surplus’ disappears because the fleet is strung out around the world, with no surplus ships at the loading zones. Freight negotiations are based on prompt ships, so it’s the backlog that does the damage. If ships speed up, surplus capacity is released to undermine the boom. But if owners do not speed up, and are sufficiently aggressive, they can benefit from the supply curve kink until someone breaks ranks, and create market spikes.

Cargo Helps

Bulkers operate in a more complex market, with different charterers. Capesizes trading at around 11.5 knots have squeezed out a few short spikes in recent years, but the smaller ships haven’t. A market moving from demand growth to apparent stagnation does not help either. Owners have a better chance of pushing rates up when cargo volumes are rising.

Does It Matter?

So there you have it. Tankers are doing well today, but are they now a better investment? The red line on the graph shows the trend in the difference in earnings over 25 years. Tankers on average earned about $7,300/day more with a slight trend in bulkers’ favour. But what the graph really demonstrates is that it basically averages out in the end. Like poker, it’s not about the hand, it’s about the players. Have a nice day.

We’re not sure if you can buy a ship on Alibaba, but the way merchant ships get traded is one of the shipping industry’s most distinctive features. These assets fluctuate wildly in value, providing shipping investors with a unique opportunity to take a flutter in terms which consign most other gamblers to the little league.

Astonishing Volatility

Since 1985 the published price assessment for a 5 year old Panamax bulker has fluctuated between extremes of $5.5m and $92m. Few assets in the global economy offer this sort of extreme pricing, in a liquid market. Of course these extremes are now part of shipping folklore and they don’t happen every day. But it leaves shipping searching for turning points and wondering whether today’s prices are a good or bad deal.

Three Sources Of Asset Value

Lots of factors determine the price of a 5 year old ship, but three stand out. The anchor is the newbuild price which can set the ceiling. But the new ship is not ready for a couple of years, so the price also includes an assessment of short-term earnings. Also the newbuild price may include a discount or premium, depending on the market. So there’s an element of market sentiment on both sides of the equation.

Old Ships Versus New

The graph plots the price of a 5 year old ship as a percentage of the newbuild price over 25 years from 1990. The average comes to 80% for the Aframax tanker and 86% for the Panamax bulker, which with all other things being equal implies an expected life of 25 years for the tanker and 31 years for the bulker, reflected in the generally higher age at which Panamaxes have been scrapped. The tanker and bulker prices follow different cycles. In 2008 the tanker index stood at around 100%, so the 5 year old ship cost the same as a newbuilding. But the 5 year old Panamax price shot up to $89m, compared with a newbuild price of $55m, giving a ratio of 162%. So the market expected the ship to earn $34m by the time the newbuilding had been delivered. A difficult premium to justify and strongly influenced by market sentiment.

Cheap Bulkers, Dearer Tankers

Today the opposite is happening, though on a more modest scale. This time it was the bulker index which fell from 80% in June 2014 to 69% in August 2015, below the historical average of 86%. Meanwhile the tanker index rose from 67% to 87%, above the historical average of 80%.

Gambling On The Margins

So there you have it. This really is a highly volatile and big ticket market. However the long-term trends show that, like in all good casinos, the odds pretty much average out in the end. So maybe the message is that today’s tanker values have now edged above the historical trend, whilst bulkcarrier prices have moved in the other direction and are looking decent long-term value on the basis of this kind of analysis. Of course in the end it’s a matter of finding the right ship and the money to buy it. You could try Alibaba, but a shipbroker would be a safer choice. Have a nice day.

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Half way through the year, and in aggregate tonnage terms the statistics show that the demolition market has been fairly busy. Scrapping of tonnage can act as a useful “pressure valve” in times of surplus capacity and challenging market conditions, and here we take a closer look at the extent to which this year’s vessel recycling might (or might not) be relieving some of the stress.

Key Dry-ver This Year

In the post-downturn era, ship scrapping peaked in 2012 at 58.5m dwt. Whilst levels then softened a little, 1H 2015 saw a total of 24.9m dwt sold for recycling. This helped offset around half of the 49.9m dwt delivered into the world fleet, moderating growth in global capacity to 1.4%. At a macro level this looks like a helpful “pressure valve” but has this really been the case and can the impact last?

Well, at 19.8m dwt (262 units), bulker demolition has already exceeded the full year 2014 total, and accounted for 79% of all tonnage scrapped in 1H 2015. Activity has been strongest at the larger end, with 68 Capesizes sold for recycling, compared to only 25 in the whole of last year and 51 Panamaxes scrapped, compared to 69. So, in reality, most of the impact of the elevated level of demolition in the first six months has been in one sector. Total bulker demolition has almost counterbalanced the 1H 2015 deliveries of 26.6m dwt (though slowing trade growth has also kept the market under pressure). Volumes in other sectors this year have actually been fairly subdued. On an annualised basis, dwt capacity sold for scrap outside the bulker sector in 1H 2015 was down by 42% year-on-year.

Shorter Shelf Life

Meanwhile, the age of bulkers scrapped also shows an interesting dynamic. In 1H 2015, the average age of bulkers sold for demolition fell to 24.9 years old from 27.2 in 2014, and the average age of Capesizes scrapped fell to 20.7 years. The recycling of younger units has been driven by depressed earnings and the relatively youthful age profile of the fleet; today 79% of bulkers are less than 15 years old compared to about 50% ten years ago.

Breaking Down The Factors

However, bulker scrapping has already begun to slow in recent months, and this could continue if owners become less willing to scrap more ‘youthful’ tonnage (in slightly improved market conditions). Furthermore, on the demolition market itself, sources report quieter, more uncertain conditions and weaker sentiment. Key markets are importing plenty of cheap Chinese finished steel products. This all weighs on demand from breakers for fresh candidates, and ship scrap prices have fallen.

Record Breaking Or Not?

So, despite the run-rate in the first half suggesting at a glance something close to record recycling levels this year, the impact of demolition as a “pressure valve” has not been that broad. And although the full year demolition total will likely be fairly robust, there are now some question marks over the extent to which the flow will be maintained. For those who follow the demolition market statistics, there’s plenty to watch out for post-Ramadan. Have a nice day.

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Some readers may remember Spike, the punk Dracula who became famous in the unlikely role of villain and hero in the 1990s TV series Buffy the Vampire Slayer. Although Spike had no actual connection with shipping, he enjoyed torturing people with a railroad spike, which at least makes him part of the transport business. And since the shipping business abounds with spikes, there’s a natural connection.

The Price Spike Saga

In fact the latest in a series of interesting and extreme price spikes is going on in the shipping market today. The graph shows the price of a 5 year old Aframax tanker divided by the price of a 5 year old Panamax bulkcarrier. The value of this ratio at the end of June 2015 was 265%, the second highest level on record. To put that in perspective, the average since 1976 has been 146% (the dotted line). The lowest value was 70% in February 1981 and until April this year the highest value was 267% in June 2001. Any time a market produces this sort of extreme spike, it’s worth taking a close look at what’s driving it, to see if there’s a potential opportunity lurking in the background.

Sharp Opportunity

The first noteworthy observation is that today’s spike appeared very quickly. Eighteen months ago, in January 2014, the ratio was only 126%, below the long-term average. But since then the price of the Aframax tanker has shot up by 32% and the Panamax bulker price has slumped by 37%. These major adjustments were driven by freight rate trends, reinforced by grim sentiment in the bulker market and a revival of interest in tankers. Could this be the moment to buy a bulker? Let’s see how previous spikes developed.

Looking back, the last two spikes were in 2006 and 2008. The 2006 spike was triggered by the boom tanker market of 2004-05. At the same time investors thought the bulker market had probably peaked out. But a 5 year old Panamax bought for $29m in January 2006 was a super deal, and would have sold for more than twice as much a couple of years later. The spike in November 2008, just after the onset of the credit crisis, saw a 5 year old Panamax cost $26m. This was a strange time with little liquidity, but on paper the ship would have sold at a premium of more than 30% in 2010.

Extreme Point In Time

But the ‘mega-spike’ in June 2001 was the real winner. Trigger happy investors who had ordered cheap new Panamaxes in 1999 were taking delivery into a lousy market, and the price of a 5 year old ship slumped to $14m. This turned out to be a real bargain. Just over six years later the 11 year old ship would have sold for over $60m, having traded through the great boom market, earning around $40 million (after OPEX). That’s $100m revenue on less than $15m investment.

For Fear Of Vampires

So there you have it. Spikes terrorise shipping investors, but often it’s a case of “no pain, no gain”. Only the vampire slayers, like good old Buffy, and a handful of intrepid shipowners have the courage to seize the day. But history also tells us that Spike’s appearances are short and sharp. Have a nice day.

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Last week’s Analysis noted that demand cycles are part of the shipping industry scenery, and 2015 so far has seen some fairly mixed trade data to say the least. China has been at the centre of this, and there’s little consensus on the way that things might head next. There are a range of possible scenarios; which one is closest to the outcome will be key – the health of world seaborne trade could depend on it.

Lead Driver Slowing?

China has long been at the heart of the expansion in global seaborne trade. Between 2002 and 2014, 4 billion tonnes were added to the world seaborne total. Chinese imports accounted for 94% of the increase in iron ore volumes, 35% of the expansion in coal volumes and equivalent to more than 100% of the growth in crude oil trade. Chinese exports accounted for around 60% of the expansion in container trade volumes. However, Chinese volumes have been under severe pressure in 2015 so far. Based on latest year to date data, Chinese seaborne coal imports are down 40% y-o-y, on the back of increased anti-pollution measures and slowing thermal power generation. China’s iron ore imports are down 1% (up 15% in full year 2014), with steel production flat, and its crude oil imports are up by just 4% (up 10% in 2014). Chinese container exports are estimated to be just 4% up, with trade to Europe down 3%.

Lack Of Consensus

Although most observers agree that Chinese volume growth will fall this year, there is a clear lack of consensus on the extent to which it will do so. A number of scenarios could unfold, and the graph shows how some of these could impact on world seaborne trade growth based on possible trends in Chinese ore, coal and crude oil imports and container exports. Scenario ‘A’ is based on our latest estimates for Chinese trade in these major cargoes. ‘B’ is based on the (reduced) rate of y-o-y growth in the year to date being maintained for the rest of the year. ‘C’ allows for trade volumes in the rest of the year to be flat compared to 2014 monthly levels. ‘D’ is based on the growth rate for the remainder of the year in each cargo reaching the full year 2014 level.

Scenario ‘A’ puts 2015 world seaborne trade growth at 2.9%. But, ‘B’ and ‘C’ suggest overall growth in 2015 of 1.6% and 2.1% respectively; much lower than has been seen in recent years, and tricky news for the shipping markets, with world fleet capacity growing by more than 3%. Moreover, Chinese import volumes in a range of other bulk cargoes are also under pressure in the year to date, and the failure of these to see improved growth could lead to downside to even the most pessimistic of the scenarios here.

Been Here Before?

So, looking at the data, there are some relatively negative scenarios. But some might argue that we have been here before, and each time Chinese expansion has pulled through, maintaining the impetus behind global seaborne trade. China is a big country, and previously government stimulus has provided support (though there is debate over the potential impact of this factor in the future). There are many possible outcomes, but one thing is for sure, if healthy growth in global seaborne trade is to be maintained, the world will be looking towards China for improved volumes. Have a nice day.

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