French orders to foreign shipyards

42
Demand
• Traffic
For the first eleven months of 1999, blast furnace iron
production output (roughly 491 million tonnes) fell by 0.6%
over 1998. This fall was in line with the 2% drop in shipped
iron ore tonnage occurring in the first half of 1999, although
traffic picked up again in the second half.
The same trend occurred in the coking coal transport
market. The market is and will be further affected by
Australia’s newfound dominance in market shares in
Asia to the detriment of the United States (the country
accounted for nearly 50% of world production in 1999).
The US have lost market share in an effort to meet
domestic demand, with the result of a lowering of the
tonne/miles ratio.
In steam coal, optimistic forecasts at the end of 1998 were
revised downward and growth in this traffic will not exceed
2% at the end of 1999. In France, the massive imports of
1998 were not renewed, with nuclear electricity production
proceeding without incident; the 12 million tonnes in 1998
gave way to 6.5 million planned through the end of 1999.
Australia and Indonesia took the largest parts of lost US
market share.
With the prospects of growth recovery mainly centered in
Asia, energy demand - and therefore demand for steam coal
that would result from this recovery - will probably not
have any considerable impact in terms of tonne/miles ratios.
Grain trade is as always a key factor for the freight market.
In 1999, Asia took advantage of extremely low prices to buy
massively in the US and in South America, which sparked
a recovery in the Atlantic market and which benefited
the Panamax sector the most. The 1999-2000 harvest
should exceed the 1998-1999 harvest by 4%.
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Jan 96
US$/day
Apr 96
Jul 96
Oct 96
Jan 97
Apr 97
Bulk carrier time-charter rates
(12 months)
Jul 97
Oct 97
Shipped volumes of other dry bulk goods should remain stable
overall in 1999 compared to 1998, a fact which nevertheless
masks significant differences within each type of dry bulk.
For example, the transport of dry bulk sugar, for which ships
with more than 20 years service may be used, increased by
around 7% in 1999. Meanwhile, steel transport has fallen
about the same amount following restrictive import
regulations by western economies, this trade being restricted
only to modern vessels.
• Industrial charterers
Restructuring in the big groups continues. Usinor’s acquisition
of Cockerill caused it to implement major changes in its supply
and chartering policies. Comilog, part of the Eramet group,
bought the Norwegian company Elkem’s manganese business
in the beginning of the year. The rush to globalisation continued
in aluminium with the 1998 Alcoa-Alumax mergeracquisition,
followed by the surprise merger between
Alcan, Péchiney and Alusuisse. Alcoa’s response to this
development was to immediately announce its merger
with long-time competitor Reynolds in an attempt to
maintain dominance in the world market. Many questions
are being raised about future chartering implications
that the existence of these new titans creates for
Handysize and Panamax operators.
The most significant developments are currently taking
place in the energy sector. Major players, Americans for
the most part, have rushed into the breach caused by
deregulation in the European electricity market. The success
of these energy groups in the US has allowed them to
greatly outpace European competitors and they are revolutionising
the natural gas, petroleum, coal and freight
markets with sophisticated risk management methods.
These markets should now become more flexible, allowing
Jan 98
Apr 98
Jul 98
Oct 98
40,000 dwt (mid 1980's)
65,000 dwt (mid 1980's)
150,000 dwt (late 1980's)
Jan 99
Apr 99
Jul 99
Oct 99