Capesize market rebounds, but challenges loom in early 2025

Rising demand ahead of the Chinese New Year has provided a boost to the market, though analysts remain cautious about the prospects for a full recovery.

Despite the positive start, the first quarter is traditionally a weaker period for the bulk carrier sector, and volatility in supply and demand fundamentals continues to cloud the market outlook.

On 3 January, average spot rates for Capesize bulkers rose to US$11,407 per day, marking a 20% increase compared with 24 December, the last trading day of 2024 when the Baltic Exchange published its market indices.

“On the surface, this is a notable increase, but it’s important to remember the market hit significant lows in December. These gains, while encouraging, are not entirely unexpected,” Greek shipbroking firm Intermodal’s head of research, Yiannis Parganas, told Riviera. Notably, according to Intermodal, in mid-December rates plummeted to their lowest levels since September 2023.

China and market sentiment

Mr Parganas attributed the market rebound in part to a surge in Chinese demand ahead of the New Year, which falls earlier this year on 29 January. As a major driver of the dry bulk sector, China’s economic growth remains a focal point for analysts’ forecasts and estimations.

Additionally, he pointed to broader market sentiment influenced by President-elect Donald Trump’s upcoming second term in the White House. Concerns over potential US trade sanctions may have prompted heightened demand for shipments, creating a temporary boost in activity.

Despite these factors, Mr Parganas predicted the current upward momentum in the charter market would be short-lived. "After the Chinese New Year, activity is likely to pause," he said, estimating average Capesize spot rates in January will stay below $20,000 per day.

Supporting this view, Braemar reported dry freight forward agreement contracts for Q1 2025 suggest an average spot rate of US$11,566 per day. For comparison, on 3 January 2024, spot rates had reached US$29,599 per day.

A blurred outlook for H1 2025

Assessing the market’s future prospects, Intermodal’s head of research predicted Capesize vessels will likely face pressure during the first half of the year. As the first quarter is typically a seasonally weak period, repeating last year’s remarkable performance will be challenging.

As for the second quarter, Mr Parganas emphasised the potential impact of Brazilian soya bean exports, particularly due to China’s growing demand. “We expect demand to start increasing in February, with more pronounced growth from March through May,” he said.