Challenging mix: China, Red Sea, Trump and orderbook in the dry bulk spotlight

Declining Chinese demand

China’s performance, a critical driver of the dry bulk market, is expected to weaken this year. Mr Shukla predicted a decrease in shipments for dry bulk commodities into Mainland China.

As previously reported by Riviera, China is contending with a mix of internal and external challenges that could profoundly impact market dynamics in the coming months.

The analyst anticipates coal demand to decline by 4%, while iron ore imports are forecast to fall by 1.5–2.0%.

“This reduction in demand could have significant implications for shipping and trade dynamics in the region, potentially affecting freight rates and overall market conditions,” Mr Shukla explained.

Panamaxes and Supramaxes face headwinds

The weak outlook extends to smaller vessel segments, such as Panamaxes and Supramaxes.

For Panamaxes, challenges stem from declining coal demand amid La Niña conditions and stable minor bulk growth, which increased by over 25M tonnes year-on-year in 2024.

A return to normalcy in the Red Sea could further reduce tonne miles, removing the benefits of alternative trade routes created by regional instability. Supply growth for Panamaxes is projected at 3.6% in 2025, outpacing tonne-mile growth at 2.2%.

For Supramaxes, reduced exports of steel products and iron ore from India are expected to have a negative impact. “This imbalance could intensify competition among vessels and exert downward pressure on freight rates,” Mr Shukla explained.

Significant newbuilding deliveries

A surge in newbuilding contracts in recent years will significantly increase vessel deliveries in 2025, particularly in the Panamax and Supramax segments.

According to Mr Shukla, Panamax and Supramax deliveries are expected to account for 4.5% and 5.1% of total capacity, respectively. After factoring in demolitions, this will translate to a year-on-year capacity increase of 3.4% for Panamaxes and 3.9% for Supramaxes.

“This significant increase in capacity is expected to affect freight rates. Stakeholders should prepare for potential downward pressure on rates as supply surpasses demand in the coming year,” Mr Shukla concluded.

Trump’s second term and tariffs  

While a probable de-escalation in the Red Sea is expected to reduce tonne-mile demand, analysts are now turning their focus to US trade policy.

Addressing the geopolitical landscape and ongoing tariff discussions intensified by President Trump’s re-election, Mr Shukla remarked that shipping and freight markets often thrive on disruptions.

“The speculation surrounding potential tariffs under President Trump’s administration could further complicate the dry bulk market. Tariffs might alter trade routes and volumes,” Mr Shukla observed.

Meanwhile, Greece-based Star Bulk Carriers executives noted during a recent webinar that tariffs, although generally seen as a trade impediment, can also prompt short-term surges in shipping volumes as businesses rush to stock goods ahead of potential restrictions.

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