Electric vehicle revolution drives new demand for dry bulk commodities

"During our 50-minute session, approximately 2,740 tonnes of dry bulk commodities will be consumed globally to either produce or charge electric vehicles," said head of research at Arrow, Burak Cetinok, who moderated the EVs and the Supercharging of Dry Bulk panel.

"Moving all these commodities would require about 183 round voyages and would take about 7.5 days for a typical dump truck driving from this hotel to the Geneva airport."

This transformation is occurring at remarkable speed, with global electric car sales projected to reach 25% of the vehicle market this year – representing over 20M vehicles, up from less than 1% (about 760,000 vehicles) in 2016.

"By 2035, we’re looking at a global electric car fleet of approximately 500M vehicles," explained lead dry bulk analyst at Kpler, Alexis Ellender. "In China, that could represent 50% of all cars on the road, with the rest of the world reaching about one-third."

The panel identified several key dry bulk commodities driving this growth. "An electric car is still basically a metal box with wheels," Mr Ellender noted, "but there’s much greater use of aluminium – about 300 kg in a typical European electric SUV, almost double that of a standard car. That works out to an extra half tonne of bauxite per vehicle."

Beyond aluminium, copper emerged as a critical material facing supply constraints. "We’ve gone from around 1.5M to 2.5M tonnes of copper concentrate production in the last 10 years," explained Anglo American head of commercial shipping Karim Coumine. "But that level is going to get capped. We’re really struggling to find where those new big sources of copper supply will come from."

Mr Coumine highlighted the extended timeline for developing new mines, typically 10-20 years from discovery to production, creating a significant lag in supply response. "The copper price we’ve witnessed over the last couple of years is certainly a testament to the fact we’re short copper in general," he added, noting treatment charges and refinery charges are currently reversed, "indicating there are too many smelters chasing too little copper concentrate supply."

Manganese, despite being less discussed, also plays a critical role. "Manganese is the fourth-most widely used metal in the world after iron, aluminium and copper," Mr Cetinok noted.

Head of shipping at Eramet, Emilie Nourry,  explained while 95% of manganese production supports the steel industry, 1% is crucial for lithium-ion batteries.

These changing commodity flows are reshaping shipping patterns. "We started transhipment operations to load Newcastlemaxes," Ms Nourry explained. "Before this, we were only using Ultramax, Supramax and Handysize. Now we’re loading more and more Newcastlemaxes, seeking freight cost reduction, CO2 emissions reduction and greater flexibility."

The panel addressed the paradoxical relationship between EVs and coal consumption. "EVs are only as green as the electricity inside them," Mr Ellender observed. "In China, the biggest market, 67% of their electricity is generated by thermal power, coal. So yes, there is support there for coal."

Managing director of Precious Shipping, Khalid Hashim, added context with a striking statistic, " China, India, Bangladesh, Vietnam, the Philippines and one more country are currently building coal-fired power stations with a total capacity equivalent to 60% more than what Japan, South Korea and Europe combined have installed. In the next five to six years, we will have another Japan, another South Korea, and another Europe joining as coal consumers."

Power grid infrastructure emerged as a potential constraint on EV adoption, particularly in Western markets. "For Europe and the West to continue on that journey of decarbonisation, we’re going to have to get the electricity price a lot lower," Mr Coumine suggested. "We’re going to have to look at alternative ways to get cheaper power if we’re going to drive through the take-up on EVs."

Despite these challenges, the panel expressed optimism about EVs’ impact on minor bulk shipping. "When you’re talking about infrastructure development for EV markets, you’re talking about cement, steel copper," Mr Hashim summarised. "These are secular demand items, not cyclical. As long as population is growing and people are doing reasonably well, this demand will continue for dry bulk."

A striking confirmation came from first-quarter data, "Despite all the negative headlines, minor bulk demand actually measured in tonne-miles so far in the first quarter of this year was up by approximately 9%," Mr Cetinok concluded, "which is quite significant considering everything that’s going on."