BIMCO: Dry bulk supply/demand balance set to weaken
Written by Nick Blenkey
It’s not just container shipping that’s feeling the tariffs pain. BIMCO has released its April 2025 Dry Bulk Shipping Market Overview & Outlook — and the outlook part is not rosy. Tariff increases by the U.S. and China, in effect as of April 25, are estimated to directly affect 4% of dry bulk tonne mile demand. They are expected to impact the growth of minor bulk cargo volumes, as shipments to the U.S. may stagnate or decrease. On the other hand, China is expected to increase purchases of dry bulk cargoes from other countries, leading the U.S. to seek alternative markets.
“We expect that the dry bulk market’s supply/demand balance will weaken in both 2025 and 2026. Since our last update, a change in U.S. trade policy has led to a deterioration in the economic outlook and an increase in uncertainty. Consequently, we have cut cargo demand growth by 0.5 percentage points in 2025 and 2026,” says Filipe Gouveia, shipping analysis manager at BIMCO.
The demand outlook is weakest for iron ore and coal shipments, the two largest dry bulk commodities. Iron ore shipments are expected to stagnate in 2025 and 2026, as Chinese domestic steel demand slips, partly due to China’s property sector crisis; Activity in China’s real estate sector has been decreasing for five consecutive years and new real estate starts have fallen 24.8% y/y during the first quarter of 2025.
Coal shipments are estimated to drop 2-3% in 2025 and 1-2% in 2026, amid rapid deployment of renewable energy capacity and stronger domestic coal mining in China and India, the two largest importers.
On the dry bulk supply side, an expected decrease in freight rates could lead to a decrease in sailing speeds, as this would allow for savings in fuel costs. Consequently, we expect supply to grow at a slower rate than the dry bulk fleet.
Overall, ship demand is estimated to stagnate in 2025 and grow 1-2% in 2026, whereas ship supply is expected to grow 1.5-2.5% in 2025 and 2-3% in 2026.
“Amid a poorer outlook for the dry bulk market, we expect that freight rates will remain lower in 2025 and 2026, than in 2024. We forecast that the outlook for the panamax segment will be the weakest, as coal accounts for over half of the cargo it transports. Conversely, low fleet growth in the capesize segment could keep that segment’s freight rates higher compared to other segments,” says Gouveia.
The weaker supply/demand outlook should also impact asset prices. Amid weaker freight rates, second-hand ship prices could weaken. Newbuilding prices have fallen since the start of the year, and BICO does not currently expect them to revert to previous highs.
“In this update, we are assuming that ships are unable to fully return to the Red Sea during the current and next year and reroutings via the Cape of Good Hope will continue. The full return of ships would be equivalent to a 2% decrease in ship demand. If this occurs, the demand outlook will be weaker than our baseline forecast,” says Gouveia.
Read the full outlook here:
