Dry bulk shipping market outlook for 2025

In the third part of our shipping market outlook series, we are focusing on the dry bulk sector with Will Fray, a Director of Maritime Strategies International (MSI).  

Speaking to the Seatrade Maritime Podcast Fray says 2024 was actually a very positive year for dry bulk shipping despite the dip in fortunes in the final months, and there were two factors supporting the market.

You can listen to the full interview as a podcast in the player above

The two factors supporting the market were China’s stockpiling of iron ore and coal, and inefficiencies which included both diversions from the Suez Canal and the Red Sea, and in the earlier part of the year restrictions on the Panama Canal due to drought conditions experienced in 2023.

“So, these factors really helped the dry bulk market during a period where actually the underlying economic fundamentals of trade and in particular for China, which is the key support for dry bulk, were really quite weak,” Fray explains.

While China was underperforming, particularly in the construction sector, stockpiling drove much of the growth in dry bulk demand. “There was growth of 165 million tonnes of cargo in 2024 estimated by MSI, whereas China's stocks of coal increased by 100 million tonnes and iron ore by 30 million tonnes. So, these significant imports then by China are partly used to build up those stockpiles in the face of very weak underlying consumption.”

However, while Chinese stockpiling had driven demand towards the end of 2024 significant deliveries of ships – some 33 million dwt across the year – saw supply absorbing the demand growth.

Dry bulk shipping demand and supply in 2025

“Looking through to 2025 then, is this kind of supply growth then going to start to impact the market through 2025? This is where we are getting slightly more cautious,” Fray says.

He says there is little suggest an overall recovery of the Chinese economy and inefficiencies such as Cape of Good Hope rerouting are already baked into the market. “The market's going to struggle to absorb the 36 million deadweight of new ships that are scheduled to be delivered in 2025.”

MSI’s modelling shows that 240 million tonnes of incremental cargo demand would be needed in 2025 to absorb all the new ships delivered. “I think that’s a really tall order for the dry bulk sector,” he states.

Will Chinese economic stimulus measures help fill the gap?

Fray does see the possibility of major stimulus measures by China in 2025 that could help underlying steel demand but also points to changes in the overall Chinese economy. MSI makes the point that the structure of Chinese trade and economy is changing and with an urbanisation rate increasing towards 70 – 80%, on a par with developed economies, they are not expecting stimulus with a broad-brush stroke effect but instead a more targeted approach.

The impact of tariffs from the new Trump administration

“The US Is not a big driver of dry bulk imports, it's really about the potential retaliatory tariffs by its trading partners,” says Fray.

The market most impacted previously was China pulled back on imports soybeans from the US and this was seen in 2018. “But the fact is that this time around we don't think China will take such dramatic measures against US soybeans exports into China because they don't have the same conditions they had before.”

Will owners continue ordering new ships in 2025?

Fray notes that 2024’s dry bulk newbuild ordering was characterised by a small number of larger owners ordering large amounts of tonnage. If 2025 sees a softening dry bulk market it’s going to be difficult to justify ordering more new tonnage.

With an orderbook that is less than 10% of the total fleet in terms of tonnage that would have traditionally made the sector attractive to newbuilding investment. But with falling demand growth Fray would not describe the orderbook as low.

“Overall, it certainly is relatively positive to the market to have an order book of that size, it's not a big threat,” Fray says. “If there is low ordering in 2025 then perhaps it sets the foundations for some market recovery or prevents a long-term collapse in dry bulk market.”