Analysts brace for challenging year in dry bulk commodities demand

According to Kpler’s 2025 outlook review, the robust Chinese demand that fuelled last year’s ’iron party’ is unlikely to continue. Analysts are also closely monitoring the impact of President-elect Donald Trump’s upcoming second term on global trade, with rumours of new sanctions adding uncertainty to the market.

Kpler’s review also highlights a softer coal demand outlook, particularly in India, where increased domestic production is expected to curb the need for imports.

Iron ore under pressure

China’s iron ore imports reached record-high levels in 2024, climbing more than 4% year-on-year, according to Kpler data. Last year’s surge was driven by massive stockpiling and a spike in surplus steel exports, but analysts warn these trends are unlikely to be sustained.

“Domestic steel demand weakness and increased tariff barriers to trade will slow crude steel output and ramp up the downward pressure on iron ore prices,” Kpler noted.

Adding to this, Reuters reported iron ore prices dropped to their lowest level in over a month on 6 January, citing declining hot metal production in China as the key factor.

Coal demand faces headwinds

Kpler’s analysis of the coal market points to challenges in India, one of the world’s largest coal consumers.

“India’s coal imports remained steady in 2024. However, with industrial demand plateauing and domestic production increasing, the appetite for imported coal is unlikely to grow in 2025,” analysts stated.

This projected decline in Indian coal imports could further strain Indonesian and South African suppliers, as demand fundamentals in the Asia-Pacific basin remain under pressure.

Meanwhile, Signal Ocean, a maritime data platform, highlighted in its 2024 annual review that coal demand in Asia continues to be driven by the energy needs of rapidly developing economies. "While renewable energy initiatives are progressing, coal will continue to play a vital role in powering industries and economies in the near term," Signal Ocean noted, emphasising a more optimistic outlook.

Protectionist policies loom over trade

Kpler also examined the potential impact of Donald Trump’s tariff policy on key agricultural commodities like corn and soya beans.

Potential tariffs on Mexico and China, the world’s largest importers of corn and soya beans, respectively, could provoke retaliatory measures, which may harm US farmers.

This situation could create opportunities for Brazil, which is poised to benefit from shifting trade dynamics. “On track to harvest a record soya bean crop in 2025, Brazil will continue to strengthen its position as an agricultural powerhouse,” Kpler noted. China’s growing reliance on Brazilian soya beans has already reduced its dependence on US suppliers.

Head of research at Greek shipbroking firm Intermodal, Yiannis Parganas told Riviera that Chinese demand for Brazilian soya beans will rise starting in February, with significant growth expected between March and May.