Sea Technology

AUG 2017

The industry's recognized authority for design, engineering and application of equipment and services in the global ocean community

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Terry Gidlow, CEO, WaterFront Maritime Services August 2017 / st 7 editorial SEA TECHNOLOGY® I N C L U D I N G U N D E RS EA TEC H N O L O G Y The Industry's Recognized Authority for Design, Engineering and Application of Equipment and Services in the Global Ocean Community Charles H. Bussmann Founder and Publisher 1924-1999 publisher C. Amos Bussmann managing editor Aileen Torres-Bennett production manager Russell S. Conward assistant design/ Joshua Ortega website manager advertising Susan M. Ingle Owen service manager ADVERTISING REPRESENTATIVES: HEADQUARTERS C. Amos Bussmann 1600 Wilson Blvd., Suite 1010 Arlington, VA 22209 Tel: (703) 524-3136 • FAX: (703) 841-0852 e-mail: NORTH AMERICA, EAST COAST Clive Bullard Bullard Communications 107 Lane Gate Road Cold Spring, NY 10516 Tel: (845) 231-0846 • FAX: (845) 265-9695 e-mail: NORTH AMERICA, WEST COAST John Sabo Barbara Sabo Gregory Sabo John Sabo Associates 447 Herondo St. #305 Hermosa Beach, CA 90254 Tel: (310) 374-2301 e-mail: EUROPE John Gold John F. Gold & Associates "Highview" 18a Aultone Way Sutton, Surrey, SM1 3LE, England Phone/FAX Nat'l: 020-8641-7717 Int'l: +44-20-8641-7717 e-mail: Sea Technology back issues available on microform. Contact: NA Publishing, Inc. P.O. Box 998, Ann Arbor, MI 48106-0998 1-800-420-6272 COMPASS PUBLICATIONS, INC. 1600 Wilson Blvd., Suite 1010 Arlington, VA 22209-2510 Tel: (703) 524-3136 FAX: (703) 841-0852 publishers of: Sea Technology Commercial Fisheries News Fish Farming News Commercial Marine Directory Fish Farmers Phone Book/Directory Sea Technology Buyers Guide/Directory Sea Tech e-News Celebrating more than 53 years of serving the global ocean community - Since 1963 - Dry Bulk Rebounds with China's Belt and Road Initiative M ost would agree that the last few years have been a period to forget in dry bulk shipping as we saw a challenging environment across dry cargo mar- kets. On February 10, 2016, the Baltic Dry Bulk Index (BDI) fell to its lowest level ever at 290 points. The situation was equally taxing on the commodities side, with mining companies increasingly under pressure to reduce operating costs, causing many to reassess their strategic planning, delay new investments and look to the future with long-term growth. However, it seems there is light at the end of the tunnel as 2017 is showing signs of moderate recovery in most areas of dry bulk shipping, despite fluctuations in the BDI. According to the shipping consultancy Drewry, the dry bulk shipping market is expected to continue this recovery over the coming months and years, driven by a narrowing supply-demand gap. Demand is projected to grow at a healthy pace of 3 percent, driven primarily by a rise in iron ore and coal trading by China. China's imports of leading dry bulk commodities rose by 8.7 percent in 2016, helped by stimulus measures that were implemented early last year. The picture is repeated with other key bulk commodities. Steel demand, which had been in decline in 2015, returned to positive growth by 2016. Iron ore imports to China have continued to rise, supported by a revived demand for steel and a reduction in domestic production. Since 2014, prices for domestic product have slumped be- low the cost of production, largely due to the low ferrous content of domestically mined iron ore in China, but fortunes are changing there, too. The U.S. Energy Information Association is forecasting an 8 percent increase in coal production in 2017. The principal reason for this increase in production is to meet growing Chinese coal demand. In 2016, China's total coal imports rose sharply to compensate for falling domestic coal output as the central government sought to crack down on overcapacity and rein in polluting and inefficient mines. Consequently, China has raised its seaborne coal imports to meet its need for high-grade coal with a greater calorific value and lower sulphur to increase ef- ficiency and reduce pollution. Since February, China has also banned all North Korean coal imports. Given the relatively high costs and low grade of Chinese domestic coal, China will need to import coal by sea from Australia, South Africa and Indonesia. These fluctuations in supply and demand, driven primarily by China, are not new. What we need to look out for is the change in demand and the ability to manage dry bulk supply chains related to China's new Belt and Road Initiative, an expansive regeneration program that is designed to bridge the infrastructure gap across central Europe to Asia-Pacific and accelerate economic growth not just regionally but on a global level. The scale of demand for bulk cargo simply to supply these projects—such as the building of extensive road and rail networks, ports and terminals—presents a significant opportunity for players across the dry bulk sector. For this initiative to be successful, however, the ability to maintain and en- hance the efficiency and cost effectiveness of supply chains is paramount. This is particularly true as these complex infrastructure projects are in the process of development and causing disruption to established transportation routes and exist- ing supply chains. Changes in demand do not always bring immediate returns across the supply chain. The need to respond quickly to new opportunities, to operate with optimum efficiency and to mitigate risk across every voyage remains critical. Port agents have an important role to play in ensuring all this happens by making sure that compliance is adhered to in individual local ports and terminals around the world, as well as working with clients to help them capitalize on new opportunities as China rolls out ambitious projects to connect East and West. ST

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