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Global Dry Bulk Transportation Carries Forward in 2020

Time:2019-12-10 17:05:57   Reading:3162

In 2019, the BDI index fluctuated sharply, and the overall trend was to restrain first and then increase. The annual average value of BDI was 1352.8 points, which was basically the same as 1352.6 points in 2018.

In 2019, the global dry bulk fleet's capacity growth accelerated, new ship orders fell significantly, and delivery capacity increased significantly. The growth of world sea volume demand continued to slow down throughout the year, and the demand for iron ore trade declined.

Looking forward to 2020, the Fed's interest rate cuts and the ECB's easing financial conditions are supporting economic growth. International dry bulk shipping trade will continue to carry heavy loads, but the growth rate will increase.

BDI index first suppressed and then increased, new ship delivery capacity increased significantly

The BDI index in 2019 first suppressed and then increased. In the first quarter of the Spring Festival, the dam collapse in Brazil and the hurricane in Australia severely affected the demand for iron ore shipments. In February, the BDI reached a minimum of 595 points for the year. Since then, with the gradual release of demand from Chinese steel mills, the tight supply of raw materials, the price of iron ore has skyrocketed, and at the same time, quotas have been used in advance under the level control policy for imported coal in mainland China, and demand for coal imports from India and Southeast Asia has been strong; in addition, some capacity has been docked to install desulfurization towers. Affecting the actual supply capacity, coupled with the installation of a desulfurization tower in part of the capacity to affect the actual supply capacity, the market freight rate continued to rise rapidly, in September BDI reached a 9-year high of 2518 points.

At the end of the third quarter, with the deployment of China ’s autumn and winter environmental protection production restrictions and National Day production restrictions, the blast furnace operating rate has dropped significantly and at the same time, China ’s soybean procurement pattern has been subject to policy changes. Although it is in the North American grain harvest season, traders have a wait-and-see attitude. The transportation demand is not high, and the freight rate is falling rapidly.

Although the demand for coal transportation was stable at the end of the next year, with the implementation of the 2020 sulfur restriction order, the willingness of shipowners to reduce the long-range capacity of airborne transmissions weakened. At the same time, the Christmas and New Year holidays were soon, and the shipowners' mentality of price reductions strengthened.

The capacity of the global dry bulk fleet has accelerated in 2019, and the growth of Panamax capacity has accelerated significantly. Global shipping capacity has grown rapidly in 2019. As of December 25, 2019, the global fleet had a total of 11,919 ships and 878 million dwt, a year-on-year increase of 3.9%. Among them, the capacity of cape-type vessels reached 1,766, 348 million dwt, and the year-on-year growth rate of dwt was 3.7%; the capacity of Panamax vessels was 2,687, 218 million dwt, and the fastest year-on-year growth rate was 5.3%; The capacity of model ships was 3724 and 218 million dwt, with a year-on-year increase of 3.6%; the capacity of portable vessels was 3742 and 105 million dwt, and the growth rate of dwt was 2.1%.

The order volume of new ships decreased significantly, and delivery capacity increased significantly. As of December 25, 2019, orders for new vessels of all types have declined, with new orders for 205 vessels, 20.62 million dwt, a significant drop of 54%. In 2019, the volume of ship deliveries began to rise after three consecutive years of decline. The number of ship deliveries was 399, and the delivery capacity was 38.1 million dwt, an increase of 33.8% year-on-year.

The transaction volume of the second-hand ship market is 527 ships, with a capacity of 32.27 million dwt, of which the large-sized and flexible-type vessels are actively trading. In 2019, the world's old ships entered a new round of dismantling process. In addition, the 2020 sulfur limit order is approaching, and structural dismantling is more obvious. In 2019, the dismantling capacity increased, with a dismantling capacity of 72 ships and a dismantling capacity of 6.66 million dwt, of which mainly the large handy and handy ships.

The growth rate of seaborne volume demand continued to slow down throughout the year, and the demand for iron ore trade declined. In 2019, the global dry bulk shipping volume was about 5.281 billion tons, an increase of 1.1% year-on-year, and the growth rate continued to decline. Among them, iron ore was 1.453 billion tons, down 2% year-on-year; coal was 1.285 billion tons, up 2% year-on-year; grain was 477 million tons, up 1% year-on-year, and small bulk cargo was 2.066 billion tons, up 3% year-on-year.

China's iron ore imports have fallen and non-mainstream ore imports have increased. In 2019, with the Vale mine disaster and the Australian hurricane affecting iron ore shipments, the Chinese iron ore market was also severely affected. From January to November 2019, China imported a total of 970 million tons of iron ore, a year-on-year decrease of 0.7%. With the continued decline in mainstream mine imports, overseas non-mainstream mine imports have increased significantly, with the major increases coming from India, Ukraine, and Canada.

China's coal imports still maintain a high growth rate, and Vietnam's coal demand has exploded. Affected by the high domestic and international coal price spreads, China still has the advantage of imported coal. From January to November 2019, China's coal imports were 299 million tons, an increase of 10.2% year-on-year, and the average import price was 536.2 yuan per ton, down 7.4%. Coal demand in Southeast Asia continues to maintain a high growth rate, of which Vietnam is the most significant. From January to November, Vietnam ’s coal imports were 39,583,000 tons, a year-on-year increase of 97.8%, which basically doubled; India ’s coal imports from January to October were 206 million tons, a year-on-year increase. 18.612 million tons, an increase of 9.91%.

After the revision of the Indonesian nickel ore ban, transportation has increased significantly, and China's bauxite imports have grown rapidly. The news of Indonesia's policy on ore exports in 2019 has caused the nickel market to become chaotic. On the Indonesian side, the export ban originally scheduled to be implemented in 2022 has been advanced to January 2020, and a large number of nickel ore has been shipped before the ban was implemented. Nickel prices soared in September to their highest level since 2014. China imported 51.80 million tons of nickel ore from January to November 2019, of which 21.39 million tons were imported from Indonesia, an increase of 56.6% compared to 13.66 million tons in 2018.

1 From January to November 2019, China imported 82.8 million tons of bauxite, a year-on-year increase of 27%, of which Guinea's supply continued to increase. In 2019, there were 11 new imported bauxite consumer manufacturers in China. At present, a total of 25 alumina plants use imported bauxite. The annual consumption capacity of newly imported bauxite has reached 24.8 million tons, of which Shanxi and Henan accounted for 56.5 respectively. % And 25.4%.

The output of mainstream mines declines, coal demand grows slowly

Iron ore output from mainstream mines has declined, and China's iron ore output has risen slightly. In the first half of 2019, under the influence of the Vale dam breach and the Australian hurricane, global iron ore production decreased significantly, of which the eastern and southeast mining areas have a greater impact; the production capacity of the three major mines gradually recovered in the second half of the year, especially in the northern Brazil SS11D mining area. Capacity is further released, but overall iron ore production is still at historically low levels. From January to November 2019, China's iron ore raw ore production totaled 786 million tons, a year-on-year growth rate of 6.3%.

The growth rate of global crude steel output has slowed down, and the pace of China's steel capacity replacement and transfer has accelerated. From January to November 2019, the global crude steel output has maintained a steady growth overall, but the regional production growth has clearly differentiated, and only Asia and the Middle East have achieved positive growth globally; Asia's crude steel output was 1.209 billion tons, a year-on-year increase of 5.1%. Among them, China and India are driving strong global crude steel output; China ’s crude steel output reached 904 million tons, a cumulative increase of 7.0% year-on-year; India ’s crude steel output was 102 million tons, a year-on-year increase of 2.0%.

China began to reduce production capacity in 2016 to help resolve global overcapacity. It is strictly forbidden for steel mills to increase production capacity and promote the resolution of excess capacity and structural adjustment through capacity replacement. According to the latest statistics from the Ministry of Industry and Information Technology, the iron and steel industry has completed the target task of eliminating excess capacity of 150 million tons in advance, so that high-quality capacity has been fully released, and the efficiency of the steel industry has also been significantly improved. However, driven by structural adjustment and benefits, the number of newly replaced steel construction projects has shown a high growth trend. In the process of capacity replacement, in addition to the trend of increasing the proportion of China ’s steel production capacity in coastal areas, Liaoning, Shandong and other regions have begun to move out of production capacity.

超 China's real estate has surpassed expectations to increase steel consumption, and India's downstream steel demand is solid. Global steel demand in 2019 will continue to grow faster than expected, and strong steel demand in China and ASEAN countries has become the main driving force for global steel demand growth. The World Steel Association estimates that China's total demand for finished steel products in 2019 will continue to grow strongly, reaching 900 million tons, a year-on-year growth rate of 7.8%. The real estate industry in 2019 is still the main driving force for China's fixed investment to maintain growth. The average land price of real estate developers has fallen, and the growth rate of sales of off-plan properties has been significantly faster than the growth rate of sales of existing homes. Housing companies have stepped up construction, accelerated shipments, and snapped up performance to support steady growth in development investment.

印度 India's steel consumption in 2019 is expected to be 102 million tons, an increase of 5.0% year-on-year. The Indian economy has declined in 2019. In order to boost the economy and boost investment, the central bank has cut interest rates five times, and has reduced interest rates by 135 basis points. At the same time, the Indian government has stepped up infrastructure construction and announced the top ten infrastructure projects and preliminary projects Preparations have enabled India's steel consumption demand to grow steadily.

Global coal production is declining except for China, and coal demand in emerging economies continues to rise rapidly. Global coal production may decline slightly in 2019. In the first three quarters, among the top 15 major coal producing countries in the world, which accounted for more than 90% of global coal production, coal production in the United States, Canada, Colombia, Germany, Poland, Ukraine and other countries continued to decline; India, Australia, South Africa, Kazakhstan, etc. China's coal output has also changed from a rise in the previous two years to a decline in output. From January to October 2019, China's raw coal output was 3.06 billion tons, a year-on-year increase of 5.7%.

Since 2018, coal consumption in China, India, and Southeast Asia has become the main driving force for global coal consumption growth. Affected by various factors including the slowdown of world economic development, the deepening impact of Sino-US trade friction, global requirements for climate change and emission reduction, and environmental protection, developed countries are reducing the use of coal, while other emerging economies represented by India, Vietnam, and the Philippines In order to rapidly increase power generation, the demand for coal has increased significantly. The overall demand for coal in the world is slowly increasing in 2019.

Mining in Guinea has attracted foreign investment, and long-term supply agreements for bauxite continue to increase. Bauxite mining in West Africa Guinea has begun to take shape after years of hard work and rectification. Chinese companies' investment in Guinea has been increasing year by year, and a number of projects under construction are progressing smoothly. There are currently 7 foreign mining companies mining bauxite in Guinea: British ALUFER Mining, Alcoa (ALCOA), Rusal's CBK in Kindia Province, Rusal's COBAD in Dian-Dian, Henan International Mining CDM Chine, Win the alliance SMB, the world's major mining companies compete to participate in the development of Guinea minerals. In addition, many bauxite suppliers such as UAE Global Aluminum (EGA) have signed long-term bauxite supply agreements with buyers such as Vedanta and Xinfa Group.

2% increase in maritime trade volume in 2020

The world's economic environment is complex and changeable, and global trade growth is under heavy load. In 2020, the Fed's interest rate cuts and the ECB's easing financial conditions are supporting economic growth. The International Monetary Fund (IMF) estimates that the world economy will grow at 3.4% in 2020, an increase of 0.4 percentage points year-on-year. Risks, the global economic growth is still full of hidden dangers. In addition, trade conflicts will remain the biggest risk of the decline in global trade in 2020. The World Trade Organization (WTO) predicts that global merchandise trade will increase by 2.7% in 2020, an increase of 1.5 percentage points from 2019, but lower than the previous forecast of 3%.

The growth rate of international dry bulk shipping trade rose slightly, supported by the increase of coal and small bulk cargoes. In 2020, the growth rate of international dry bulk shipping trade will increase. As China ’s steel demand and terminal consumption continue to differentiate, it is expected to be basically stable; real estate regulation and control policies are neutral, and investment growth will remain stable. In the peak period of completion in 2020, the newly started area will still maintain a 4-5% growth rate; infrastructure The underpinning continues to strengthen, credit is still tight, and the recovery of infrastructure investment growth is limited; auto overdraft consumption still needs to be digested, and it is difficult to recover consumption to the previous level in the short term. The growth of iron ore supply is expected to exceed the growth of demand, and there is room for iron ore prices to fall further.

In terms of coal, the growth rate of global energy demand has slowed down, China ’s coal production capacity has continued to be released, and the overall supply and demand are in excess. China ’s coal imports are expected to be basically flat. Vietnam, India and other emerging Asian markets continue to be bullish, and coal import demand continues to increase.

Lu Xiaozong has more highlights in bulk cargo, and the demand for bauxite transportation from Guinea to China continues to rise. As Vietnam ’s largest clinker and cement export market, China ’s cement prices have risen due to domestic environmental protection policies, and import demand has continued to increase. Vietnam ’s excess cement output will further intensify in 2020, and export demand will continue. It is expected that global maritime trade volume will increase by about 2% in 2020.

In 2020, the capacity growth rate will continue to be higher than the capacity growth rate. Filling with low-sulfur oil may cause short-term capacity constraints. The 2020 delivery plan continues to increase to 56.4 million dwt. Clarkson expects the capacity growth of the international dry bulk fleet to increase slightly to about 3.5%. Due to the tight supply of fuel bunkers at the port and the delay in the refuelling, there may be tight ship turnover in the early stage.

It is expected that the average BDI index in 2020 will be slightly adjusted back to about 1200 points, and the early freight rate will be greatly affected by the capacity.

In summary, the supply and demand growth rate of the international dry bulk transportation market in 2020 is still not optimistic. It is expected that the average BDI index in 2020 will continue to fall back to about 1200 points, and the peak value will appear in the early third quarter. At the same time, the capacity turnover in the first half of 2020 will be greatly affected by the supply of low-sulfur oil. Port congestion and waiting for refills may exist.

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