Demand for bulk commodities is expected to increase throughout the rest of the year and well into 2023, despite ongoing risks to the global economy.According to Niels Rasmussen, chief shipping analyst for international shipping association Bimco, there’s been upheaval in the market since the outbreak of Covid-19, and while the pandemic is far from over, other risks such as the war in Ukraine and ongoing congestion have only added to the uncertainty.“Any shift in congestion – either up or down – could have a major impact on market conditions,” he said during an online event. “There are also plenty of risks to cargo demand, and if they materialise, they could lead to an adverse development in both the supply/demand balance and rates and prices of bulk commodities.”Rasmussen, however, was optimistic that demand growth in 2022 would match or not be far behind Bimco’s estimated supply growth. “A potential rest-of-year increase in average tonne miles for coal and grains and a resurgence in China could add to demand. For 2023, we currently estimate higher demand growth as commodity prices and inf lation are expected to moderate.”He said the low demand out of China in the first half of the year had hurt the Baltic Exchange Dry Index (BDI), which had fallen to only 1 302 points earlier this year. “Since then, the market has seen some recovery, supported by Brazilian exports which recovered thanks to some heavy rains, and Indonesia’s coal export ban being lifted, bringing the BDI back up again.”According to Rasmussen, the invasion of Ukraine by Russia impacted the bulk sector significantly, leading to a resurgence in high freight rates. “Charter rates have followed along the same path, and prices for ships that are five years old are quickly approaching the level of newbuilding prices. There has been a consistent increase in time charter rates and second-hand prices.”In the meantime, newbuilding contracting, he said, had come to a virtual halt during the first half of this year. “The size of the order book has hit a new low of only 6.6% of the trading f leet. Newbuilding prices have, however, still been pushed upwards by heavy contracting of container and LNG ships, although the rate of increase is now slowing down.”Rasmussen said congestion remained an issue across all shipping sectors this year. “More ships have consistently been delayed for longer than in 2021. This naturally adds inefficiency to the supply chain and reduces effective supply,” he said.Developments in China needed to be monitored continuously, said Rasmussen, considering the country accounted for around 35% of global cargo demand. “Strict zero-Covid policies and extended lockdowns have caused a major reduction in demand for coal and iron ore.”Iron ore to date has slowed down by 2.1% already. Grains were another commodity that had seen a massive 8% decrease compared to last year. This, he said, was due to the Russia/Ukraine war.According to Rasmussen, with the International Monetary Fund (IMF) lowering its forecast for global GDP growth to 3.6% for 2022 and 3.6% for 2023, the forecast for all main importers of bulk commodities had also been reduced.