Delft University of Technology
Faculty Mechanical, Maritime and Materials Engineering Transport Technology
C.R.J. Versteegh Bulk handling and transport
Literature survey, Report 2004.TL.6867, Transport Engineering and Logistics.
This report gives a better understanding of the dry cargo bulk commodity market. The dry bulk commodity market is an international seaborne market and its main drivers are economic developments and energy production/consumption in different countries. Topics like commodity characteristics, transported volumes, seaborne trade patterns, future trends and a volumetric forecast for each commodity until 2010 are presented.
In the last 10 years coal, iron ore and grains (agrobulk) have been the largest commodities in transported volumes followed by bauxite, alumina and phosphate rock. Also little commodities like fertilizers, forest products, waste scrap, pig iron and biomass are examined and documented in this report. At this moment coal (steaming and coking) is the largest commodity and will remain in this position for the future, due to the increase in energy demand in developing countries and the abundance of steaming coal worldwide. In Europe, biomass is a growing commodity to the greenhouse effect. Biomass can be used instead of other commodities like coal and oil currently used for energy production.
China and India will together take one third of the total increase of energy consumption worldwide, but other countries in South East Asia and Latin America will follow. The world population is still growing. This means that more mouths have to be fed in the coming future. An increase of the production of grains and other agrobulk is expected, but this increase has to be realised in the developing countries. The 'developed' countries will not show an overall significant increase. The use of fertilizers in developing countries will increase due to mostly low agricultural condition of the soil. China was in the last years the growing market. Large volumes of commodities like iron ore, bauxite, alumina and agro bulk have been imported into China, resulting in high prices for commodities and shipping, but also Chinese port congestion and a decrease in available ships. China will remain a very important export market, but an economic set-back is possible in the nearby future as a result of the overheating and rapid expansion of the Chinese economy.
Forecasting the increase or decrease of transported volumes of commodities is very difficult due to large amount of factors influencing the market. As a practical tool is for this forecast problem the high case/low scenario idea is implemented. This tool 'translates' term like economic development into practical parameters to tackle the long-term forecast issues.
Information of different sectors is essential to get a good forecast. Worldwide there are a lot of companies specialized in research of the dry cargo market like Fearnleys (Norway), Drewry shipping consultants (Great Britain), Ocean shipping consultants (Great Britain). Information of these companies is for sale and therefore a limited resource of information. Another source is available information are internet site from different organisations like the International Iron and Steel institute (IISI), the Australian Bureau of Agricultural and Resource Economics (ABARE), the OECD, UNCTAD, 'coal portal' (Barlow Jonker coal consultants) are very good sources to get statistics form the past years. Magazine like 'Dry Cargo international' and 'International Bulk Journal' play an essential role to collect trends and new developments in different commodity markets.
These commodities are transported by ships especially build for transport of bulk commodities (bulk carriers). The price of shipping is very much dependant on the supply and demand rule. The shippers have demand for ships and the shipping companies can supply bulk commodities. Also short-term effects like port congestion, weather and market sentiment have large effect on these prices resulting in large price fluctuations. Competition between different players of the dry cargo bulk commodity market is substantial and has high impact of the trade patterns around the world.
The important conclusions and recommendations of this study are:
The main drivers for this market are economic developments, energy production/consumption in different countries. Also the increase of world population especially in developing countries plays an essential role on the long-term.
In the last 10 years coal, iron ore and grains (agrobulk) have been the volumetric largest commodities followed by bauxite, alumina and phosphate rock.
Coal especially steaming coal will grow in the future due to the rising of energy demand in developing countries. Only China and India will take 1/3 of the rising energy demand.
The world population is still growing also resulting in an increase of agrobulk demand. The increase of production of agrobulk will come out of developing countries.
In the EU, biomass is becoming an important 'new' dry bulk commodity due to regulations of the EU to restrict its addition to the greenhouse effect.
Brazil is an important factor on the world export market for commodities like iron ore, soja beans and forest products and will expand its position. Recommendations:
Future studies will have to focus more on developments within countries that have direct or indirect influence on the dry cargo bulk commodity market.
The use of scenarios like the high case/low scenario should be broadened to other commodities. Continuous monitoring of the dry cargo market is essential due to its fast changes.
Keep a close watch at the economic developments in China. It remains a very important country for dry cargo exports, but its economy is getting overheated and this can have negative consequences in the nearby future.
The developments in India should be monitored due to the enormous amount of people, natural resources and the new opportunities for foreign companies to invest due to the changes of policy regulations.
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