“We estimate the dry bulk supply/demand balance to weaken in both 2025 and 2026, compared to 2024. Demand growth is expected to slow, impacted by a weaker economic outlook for China and the world and a shift in US trade policy,” says Filipe Gouveia, Shipping Analysis Manager at BIMCO.
The rise in tariffs and the start of trade negotiations by the US have introduced additional uncertainty and are directly impacting 4% of global dry bulk tonne mile demand. In China, this is expected to slow economic growth starting in the second half of 2025, while front-loading ahead of the start of tariffs led to comparatively stronger growth in the first half. This is adding to previous pressures from a struggling property market and deflation.
Ship demand is forecast to only grow up to 1% in 2025 and 1-2% in 2026. Demand is expected to be driven by an increase in average sailing distances, supported by stronger iron ore and bauxite shipments out of the South Atlantic and into Asia. Cargo demand growth appears timid, despite stronger minor bulk shipments, since coal and iron ore shipments are forecast to fall until the end of 2026.
Ship supply is estimated to grow 1.9% in 2025 and 2.6% in 2026, driven by higher panamax and supramax deliveries. Ship recycling is expected to gradually increase but should be limited to older, less competitive ships. Sailing speeds are expected to decline, causing supply to grow slower than the fleet.
“Weaker market conditions have already taken a toll on freight rates and asset prices. The Baltic Dry Index (BDI) has fallen by an average of 28.2% so far this year, with rates softening across all segments. More recently, in July, freight rates firmed up for the capesize and panamax segments, supported by stronger iron ore cargoes out of Brazil and a pick-up in coal shipments to East Asia,” says Gouveia.
Forward Freight Agreements (FFA) indicate that the market expects freight rates for panamax and supramax ships to soften during the rest of 2025, compared to current levels and further weaken in 2026, compared to 2025. Both segments are expecting a rise in ship deliveries amid a poor demand outlook for coal.
“The capesize segment is expected to outperform the smaller segments in the dry bulk fleet during 2025 and 2026. It will likely benefit from China’s growing demand for bauxite and the expansion of iron ore mining projects in the South Atlantic. Furthermore, its fleet is expected to only grow 3.9% between 2024 and 2026, the slowest of all segments,” says Gouveia.