Market Insight
SPRING 2017

Annual report
Year 2017

Market Insight
FALL 2017

Market Insight
WINTER 2017-2018

4 Available chapters

ECONOMIC CONTEXT IN EUROPE

Quarterly GDP growth rate and outlook for the eurozone (%)

Source : OECD – Economic outlook January 2017

  • For Q3 2016, GDP growth compared to Q3 2015 is estimated at 3% globally, and at 1.8% for the Eurozone; these estimations are slightly higher than the ones provided at the end of 2016 (+0.2 pp) in the previous economic outlook made by OECD and IMF.
  • Two main reasons explain the update of the outlook:
  1. World trade is picking up again, in the wake of rising commodity prices, which helps commodity-rich emerging market economies to trade more with advanced countries. Emerging economies are enjoying this so-called terms-of-trade effect, which is benefitting global world trade.
  2. Fiscal stimulus for the entire world economy, which is projected to be triggered with the new economic policy stance of the US administration.
  • For the entire time span 2017-2018, OECD and IMF project roughly the same rate of growth as was settled for the Eurozone for Q3 2016 (between +1.6% and +1.8%).

EXPORTS FROM EUROPEAN UNION (EU) COUNTRIES TO COUNTRIES OUTSIDE (EXTRA-EU-28) AND INSIDE (INTRA-EU-28) THE EU (2010 = 100)

Source : Eurostat

  • After the slowdown in world trade in the 1st half of 2016, exports of goods and services recovered in the 2nd half of 2016 and are expected to recover further in 2017 and 2018.
  • The reason can be found in the resurgence of commodity prices, which enables commodity-rich developing countries to improve their terms of trade and their capability to import more goods from EU countries.¹

¹ See: European Commission (2016), European Economic Forecast, autumn 2016 and winter 2017.
[Terms of trade = relationship between export prices and import prices of a country]

INDUSTRIAL ACTIVITY AND INLAND NAVIGATION

INDEX OF INDUSTRIAL PRODUCTION IN THE EU-28 AND GOODS TRANSPORT IN THE EU

Source : IWT goods transport

INDEX OF INDUSTRIAL PRODUCTION IN THE EU-28 AND GOODS TRANSPORT IN THE EU

Source : IWT goods transport

  • Industrial activity in the EU keeps on progressing steadily, and should continue this trend in 2017 and 2018, supported by higher dynamics in world trade and positive spillover effects from the expansionary fiscal policy in the USA.
  • Although IWT demand has partly recovered from the cargo losses of autumn 2015 (cargo losses that even started during summer 2015 for the Danube), a new low water period in autumn 2016 led again to some loss of cargo.

 

INCREASE OF INDUSTRIAL PRODUCTION IN EU BY  1.4% IN Q3 2016 VS Q3 2015

ECONOMIC SITUATION OF INLAND NAVIGATION-RELATED SECTORS

On mineral oil products segment

REFINERY OUTPUT IN THE EU AND CRUDE OIL PRICE (INDEX M1/2013 = 100)

Source : Eurostat (Refinery output) and Federal Reserve Bank of St. Louis (Oil price)

 

  • Having recovered from a multi-annual low point in February 2016 (30 US-$ per barrel), oil prices stabilised within the band of 45-55 US-$ per barrel in the 2nd half of 2016.
  • This stabilisation still enabled sufficiently high profit margins in the refinery sector, which explains the pick-up of refinery output in the 2nd half of 2016.
  • The OPEC agreement from November 2016 will push oil prices further upward in 2017, as it leads to worldwide cuts in oil supply by 1.2 million barrels per day from January 2017 onwards.
  • However, rising oil prices have important side effects: unconventional oil drilling fields regain their profitability and reach their breakeven point if the oil price passes the threshold of about 50 US-$. Therefore, new oil supply enters the market, thereby limiting the increase of oil prices.
  • Altogether, this suggests that oil prices are expected to be balanced within a range between 50 and 60 US-$ per barrel in 2017, implying only a modest weakening for refinery output and transport demand for mineral oil products (source: OilPrice.com and European Economic Forecast).
  • In parallel to the expected oil price movements, the fuel costs in inland shipping are expected to be balanced within a price band of 50 to 60€/100 l in 2017.

DEVELOPMENT OF FUEL PRICES IN THE IWT SECTOR (€ / 100 L)

Source : CBRB

On steel industry segment

 

  • The current situation is marked by stabilisation and stagnation; according to the German Steel Industry Association, the number of new orders in the German steel industry has increased marginally, so that steel production should pick up slightly in 2017 (+1%).
  • Looking at the steel industry output in Austria, we observe a 3.2% decrease between 2015 and 2016 (source: World Steel Association).
  • Romanian steel production fell by 2% in 2016, but Serbian production increased by 23%, thanks to Chinese direct investment (takeover of the steel mill in Smederovo/Danube).

 

On construction sector segment

EVOLUTION OF BUILDING PERMITS FOR RESIDENTIAL HOMES IN THE EU (INDEX 2010=100)

Source : Eurostat

  • The transport of sand, gravel and other building materials is related to the activity in the construction sector and the development of extraction sites in river beds.
  • The construction activity in the EU is rising slightly, but shows very strong growth in the Netherlands. In France, this sector has been growing since 2015 and is expected to remain on a positive path.

 

On agricultural products segment

  • The harvest results in the 2nd half of 2016 showed large variations in Europe. In Western Europe, unfavourable climate conditions led to huge losses: according to the organisation Agrimer, in 2016 the production of French wheat was estimated to be 1/3 lower than the average of the past 5 years, and 1/4 lower than in 2015. Also the German harvest results were much lower in 2016. This has negative effects on the transport of wheat on the Rhine, Seine, and other waterways in France and Germany.
  • In the Danube region, the production of crops harvested in autumn 2016 was higher than in the previous year (Source: Agrimer). The exports of grain via the Danube and the seaport of Constanza, including traffic coming from Serbia and Hungary, to countries in Southern Europe and Northern Africa were therefore promoted. In 2016, Romania was expected to become the biggest exporting country of wheat in Europe, ahead of France and Germany.

 

20% : AGRICULTURAL PRODUCTS SHARE OF YEARLY TONNAGE TRANSPORTED ON FRENCH INLAND WATERWAYS

Market Insight
SPRING 2017

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Market Insight
FALL 2017

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Market Insight
WINTER 2017-2018

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