Bulk trade has started strong in 2024, according to a new analysis by HSBC's Global Trade Monitor.
It noted that the monthly global seaborne dry bulk trade indicator compiled by Clarksons showed 5% year-on-year (y-o-y) growth in January-February on the back of robust demand across all segments.
Seaborne iron ore volumes rose 12% during the same period, on increased Brazilian exports, partly due to a drier rainy season.
The HSBC Global Trade Monitor noted that the seaborne coal trade indicator grew 4.2% y-o-y, led by firm demand in China, with seaborne Chinese coal imports up 30% y-o-y on strong heating demand.
The seaborne grain trade indicator increased 8.6% y-o-y, propelled by firm Ukrainian and US exports.
"Indeed, Ukrainian grain exports reached 5.4mt in February 2024, the highest level for the month on record, even exceeding pre-Russia-Ukraine war levels," it said.
Minor bulk trade was up 5.3% y-o-y.
The report noted resilient minor bulk but headwinds for coal and iron ore in 2024.
HSBC Global Trade Monitor said the International Energy Agency (IEA) estimates global coal trade likely peaked in 2023 and will decline thereafter due to renewable capacity expansion.
"Iron ore demand could also see some pressure due to China's sluggish property market," it added, noting that the HSBC Metals & Mining team sees China's iron ore demand declining at a CAGR of 1.4% over 2024-28 and global demand remaining flat over the period.
"However, minor bulk trade, particularly bauxite, copper and nickel, could see a continuous benefit from the energy transition and easing economic headwinds," the HSBC analysis said.
It added that supply inefficiencies remain to help counter steady fleet expansion.
Meanwhile, the report noted that passage of bulk carriers through the Suez Canal is down 47% vs mid-December 2023.
"We expect effective fleet growth of 2.7% in 2024 but see diverging trends in order book by vessel size," it added.
While the industry order book steadied at 8.8% of the existing fleet, the Capsize order book fell from 7% in December 2021 to 6% in March 2024, compared to the minor bulk order book, which expanded from 8% to 9%.
The HSBC report further noted that with second-hand vessel prices trading at a premium to newbuild prices, the industry may see new contracting pick up on better demand and rate expectations.
"This, alongside muted scrapping, suggests limited downside for fleet growth unless offset by further inefficiencies and congestion in the US and Brazilian ports," it added.
The report also cited the Baltic Dry Index (BDI) Index, which showed a drop of 5% week-on-week (w-o-w), with Capesize earnings softened by 9% w-o-w to US$30,601/day from the post-LNY rally, but rising grain exports in the Atlantic are driving Panamax rates up by 6% w-o-w to USD20,260/day.
"Overall rates remained healthy, with the BDI averaging 1,809 YTD or 32% above the 2023 average," the HSBC Global Trade Monitor, further said in its analysis.
