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.
Reports on Transport Engineering and Logistics (in Dutch)
Modified: 2005.02.17;
logistics@3mE.tudelft.nl
, TU Delft
/ 3mE
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/ LT.