Casper Burgering
Senior sector economist
prospects for the dry bulk sector
Commodity Trade Patterns
Sector & Commodity Research 31 October 2012
Changing Patterns in Seaborne Trade
Source: Clarkson Research Services, ABN AMRO Sector & Commodity Research
Global seaborne trade patterns changed significantly in 20 years } Imports into Asia increased strongly by 274% in 20 yrs (cagr 14% pa) } Iron ore and coal seaborne trade main drivers of growth
14%
13%
73%
Data in figure based on trade of iron ore, coal and wheat (= 60% of total dry bulk trade)
20%
52%
28%
0%10%20%30%40%50%60%70%80%90%
100%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Coal, iron ore, grains import into EUCoal, iron ore, grains import into AsiaCoal, iron ore, grains import into Others
Dry Bulk Trade 1992-2012 (seaborne)
0 200 400 600 800 1,000 1,200
OtherCoke
Pig ironPhosphate rock
SugarPetroleum coke
Nickel oreAnthracite
SoyabeansCement
FertiliserBauxite
ScrapAgribulks
Forest productsCoking coal
WheatSteel products
Steam coalIron ore
1992 (volume in mln tonnes) 2012 (volume in mln tonnes)
Iron ore21%
Metals related27%
Steam coal13%
Agri related32%
Other7%
Source: Clarkson Research Services, Metal Bulletin, ABN AMRO Sector & Commodity Research
Dry Bulk Trade 1992:
Dry Bulk Trade 2012: Other10%
Agri related21%
Steam coal20%
Metals related21%
Iron ore28%
China
India
Russia
Indonesia
US
UK
Germany
France
Italy
Spain
TurkeySouth Africa
JapanNetherlands
Brazil
0
10,000
20,000
30,000
40,000
50,000
60,000
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Urbanisation ratio (%)
GD
P p
er c
apita
(US
D)
Size bubble = crude steel use per capita (kg)(see value near or in bubble)
56
44545 97
323
335
239
459
539248
292
500
163
298147
Economic Development of Countries
Source: IISI, Worldbank, OECD
40% of world population
high medium low
high medium low
China & India Urbanization Process (2011)
Source: McKinsey Global Institute, Thomson Reuters Datastream
Today, 50% of world population lives in urban areas
Srinagar
Jammu
Ludhiana
Amristar Chandigam Simla
Jodhpur
Jaipur
Dehli New Dehli Kathmandu
Itanagar
Kandla Gandhinagar
Indore Bhopal
Gwalior
Agra Lucknow Kanpur
Patna
Ahmadabad
Siliguri
Sillong Ledo
Veraval
Vadodara
Jabalpur
Varanasi
Allahabad Dhambad Agartala
Kohima
Silvassa Surat
Durg-Bhilainagar
Howrah
Imphal
Aizawl Ashansol
Ulhasnagar Nasik
Nagpur Raipur Jamshedpur Kolkata
Cuttak
Sholapur
Mumbai Poona Hyderabad Vishakhapatnam
Puri Bhubaneshwar
Vijayavada
Panaji
Marmagao Guntakai
Mangalore Bangalore Chennai
Pondicherry
Salem
Madurai
Mysore
Trivandrum Cochin
Tiruchirapalli Calicut (Khozikode) Cuddalore
Coimbatore
Ranchi
Sichuan
Heilongjiang
Jilin Liaoning
Hebei Shandong
Fujian Jiangxi
Anhui Hubei
Hunan
Guangdong Guangxi
Shanghai Henan
Shanxi
Hainan
Inner Mongolia
Shaanxi Ningxia
Gansu Qinghai
Guizhou Yunnan
Tibet
Xinjiang
Jiangsu
Zhejiang
Tianjin
Taiwan
Beijing
Hong Kong Macau
Chongqing
China 2011:
Population: 1,339,724,852
Urban people: 679,000,000
Urbanisation rate: 51%
India 2011:
Population: 1,189,000,000
Urban people: 357,000,000
Urbanisation rate: 30%
China & India Urbanization Process (2025-30)
Source: McKinsey Global Institute, Thomson Reuters Datastream
By 2025, more than 60% of world population lives in urban areas
Srinagar
Jammu
Ludhiana
Amristar Chandigam Simla
Jodhpur
Jaipur
Dehli New Dehli Kathmandu
Itanagar
Kandla Gandhinagar
Indore Bhopal
Gwalior
Agra Lucknow Kanpur
Patna
Ahmadabad
Siliguri
Sillong Ledo
Veraval Vadodara
Jabalpur
Varanasi
Allahabad Dhambad Agartala
Kohima
Silvassa Surat
Durg-Bhilainagar
Howrah
Imphal
Aizawl Ashansol
Ulhasnagar Nasik
Nagpur Raipur Jamshedpur Kolkata Cuttak
Sholapur Mumbai Poona
Hyderabad Vishakhapatnam
Puri Bhubaneshwar
Vijayavada
Panaji
Marmagao Guntakai
Mangalore Bangalore Chennai
Pondicherry
Salem
Madurai
Mysore
Trivandrum Cochin
Tiruchirapalli Calicut (Khozikode) Cuddalore
Coimbatore
Ranchi
Sichuan
Heilongjiang
Jilin Liaoning
Hebei Shandong
Fujian Jiangxi
Anhui Hubei
Hunan
Guangdong Guangxi
Shanghai Henan
Shanxi
Hainan
Inner Mongolia
Shaanxi Ningxia
Gansu Qinghai
Guizhou Yunnan
Tibet
Xinjiang
Jiangsu
Zhejiang
Tianjin
Taiwan
Beijing
Hong Kong Macau
Chongqing
China 2025:
Population: 1,470,787,000
Population growth: 10%
Urban people: 926,000,000
Urbanisation rate: 63%
India 2025-30:
Population: 1,470,000,000
Population growth: 24%
Urban people: 588,000,000
Urbanisation rate: 40%
Wuhan
Shenzhen
Current Wheat Trade Flows
Volatile trade patterns in agribulks
Source: IGC
} Supply is highly dependent on (regional) weather conditions } Major import demand: Africa & Far East Asia } Share in global output of China and India high (resp. 17% and 13%)
15%
18%
28%
13%
% = share in global wheat trade (figures 2010/2011)
6%
3%*
* Russia share 2009/2010 = 15%; Russia share 2011/2012 (e) = 15%
Current Coking Coal trade flows
Trade is likely to become more concentrated
Source: USGS, ABARE, AME, IEA, Metal Bulletin
} Australia & N. America together have 84% share in coking coal trade } Game changer: Mongolia export volume is joining the ranks! } Shift from seaborne to landborne trade
to Asia
11%
51%
26%
6%
7% 23%
3% 6%
6%
10% 2%
5%
% = share in global coking coal trade
7%
Mongolia!
Current Steam Coal Trade Flows
Increased concentration reduces risk associated with greenfields
Source: USGS, ABARE, AME, IEA
} Atlantic Basin: ‘paper trade’ grown rapidly in last 4 yrs } Game changers: increasing demand from Japan after Fukushima? } India increasing coal import; relations with Indonesia & S. Africa
17% 8%
6% 9%
13%
% = share in global steam coal trade
15%
36% 33%
8% 4%
2%
4%
2%
Production Growth in Coal Across the Globe
Despite rising costs, investments in mining increase
Source: IEA, Metal Bulletin
} Top 30 coal miners have high reserves-to-production ratio: 60 yrs } Output of hard coal in US and Europe is in a downward trend } Centre of gravity of supply (and demand) in Far East Asia
+80%
+69%
+57%
+25%
+12%
+13%
0
1,000
2,000
3,000
4,000
5,000
6,000
2009 2015 2020 2025 2030 2035
Mtc
e
US Europe AustraliaRussia China IndiaIndonesia South Africa Colombia
Increase production hard coal 2009-2035
Current Iron Ore Trade Flows
China is main importer of iron ore with a share of 59% in 2011
Source: UNCTAD, Metal Bulletin
} 95% of global iron ore trade is seaborne } Pacific trade 55% and Atlantic trade 45% (in 2001: 45%-55% resp.) } Output Pilbara region (Aus) approx. 430 mln tonnes/yr and rising
38%
29%
9%
4%
3%
35%
6%
22% 2%
% = share in global iron ore trade
8% 2%
New Iron Ore Project Developments until 2014
- Rio Tinto - BHP Billiton
- Fortescue Metals Grp
- Xstrata
- Eight minor companies
- Atlas Mining
- Brockman Resources
- FerrAus Ltd
- CITIC Pacific Mining
- Kumba - Xstrata
- IMX
- Vale - in Minas Gerais
- ArcelorMittal / Baffinland (Mary River Project)
Approx. 200 Mt reserves
- Rio Tinto (Guinea Simandou)
- Rio Tinto (JV Orissa Mining)
> 400 Mt
75-100 Mt
50-75 Mt
~ 30 Mt
> 100 Mt
~ 20 Mt
* Minor selection of total green- and brownfield projects worldwide
New discovered iron ore deposits in Qinghai
50-75 Mt
Sources: USGS, UNCTAD, Mining Journal, various public sources
} May 2012: Total project pipeline is 796 Mt of new production capacity, to come on stream between 2012-2014 ð Of which: 34% is certain, 28% is probable, 38% is possible
Country Dependency on Iron ore & Coal
Source: ABN AMRO Sector & Commodity Research (based on data from BP, EIA, UNCTAD)
▪ Basis: share in world proven reserves 2011
▪ Domestic availability & self sufficiency rate
▪ External dependency
▪ Basis: share in world imports 2011 ▪ Necessity for future development and
stage in economic transition ▪ Urbanisation rate and demographics
Low High
How high is need for the commodity to a country?
What is the reserve base of a country?
Low
High
China – iron ore
China – coal
India – iron ore
India – coal
Japan – coal
Japan – iron ore
EU – iron ore
Indonesia – coal
S.Korea – iron ore
Australia – iron ore Brazil – iron ore
Brazil – coal
Mongolia – coal
Developed countries Newly industrialized Developing countries Least developed countries
Russia – iron ore
Russia – coal
Americas – coal
Australia – coal
S.Korea –coal
S. Africa – coal
EU – coal
0
200
400
600
800
1,000
1,200
1990 2000 2009 2020 2035
Mtce
0%
20%
40%
60%
80%
100%
Atlantic Coal TradePacific Coal TradePacific Coal Trade Share (r.axis)
To conclude on Dry Bulk Trade Patterns
0
200
400
600
800
1,000
1,2001996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Mt
40%
45%
50%
55%
60%
Atlantic Iron Ore Trade Pacific Iron Ore Trade Pacific Iron Ore Trade Share (r.axis)
China joined WTO & IOC announced
Beijing 2008
Source: IEA, Clarkson Research Services, ABN AMRO Sector & Commodity Research
Constantly changing trade patterns, but Asia will remain key trading area } Over the past 20 years seaborne trade patterns changed significantly } Dry bulk seaborne traded volumes increased by 400%+ in 20 years } Urbanisation & industrialisation (China, India) will provide solid base } Agribulk trade patterns will remain volatile } Centre of global coal trade will be in the pacific (share of 75% in 2020) } Huge investments will keep Australia on No.1 in iron ore output
forecasts by IEA
Further Information & Disclaimer
Casper Burgering Senior sector economist – Hard Commodities
ABN AMRO Group Economics | Sector & Commodity Research
tel: +31 20 383 26 93
e-mail: [email protected]
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