Dry cargo trade may be held back

Elements of weakness in commodity import demand may be clearly visible this year, although supportive aspects also are likely to be prominent. World seaborne dry bulk trade growth could decelerate sharply in 2025 as a whole after last year’s expansion.

 

As an underlying driver, the broad progress of economic activity among countries influencing dry bulk import demand is not showing signs of accelerating from the trend over the past twelve months. A solid pickup in economic growth is not yet foreseeable based on recent signs and assessments by the IMF and OECD. The expected further reductions in policy interest rates, providing a potential boost for activity, seems to be a more extended process than envisaged earlier.

 

Prospects for world grain trade in the current 2024/25 marketing year ending third quarter 2025 are negative. Updated US Department of Agriculture forecasts published a few weeks ago suggested a steep downturn could occur. The total (wheat, plus corn and other coarse grains) is estimated to fall by 36mt (million tonnes) or 8% from the previous year, to 429mt.

 

About three-fifths of the global reduction is expected to be concentrated within the East Asia region, as shown in table 1, including wheat in a July/June year and coarse grains in a October/September year. Weaker imports into the Middle East may contribute another large decrease. Among individual countries the 2024/25 decline envisaged is set to be especially apparent in China, where grain imports may be one-third lower at 41mt, reflecting lower wheat, corn and barley import demand.

 

Despite vigorous expansion of world coal trade over the past two years, the probability of adverse influences becoming more noticeable in the near future remains valid. The shift towards alternative energy sources is still unfolding in many countries, and a peak in coal trade seems to be approaching.

 

Over the past two years, a massive 80% rise in China’s seaborne coal imports, from 234mt in 2022, to 421mt in 2024 (based on Clarksons Research data) has underpinned global growth. Elsewhere among all other countries together, a negative trend has been unfolding, with reductions in each of the past two years. It is unclear whether China’s import enlargement will continue in 2025, and perhaps unlikely. This possibility implies flat or lower global coal trade this year.

 

Similarly, in the iron ore segment, the upturn in world seaborne trade seen over the past two years has reflected China’s import demand growth. The outlook for the steel industry among raw materials importing countries during the twelve months ahead suggests that there is scope for higher imports by some buyers. But it is not yet certain that these additional volumes will result in a higher overall total.

 

Iron ore import demand excluding China comprises only about a quarter of the world total, and therefore changes normally have a limited effect. Extra volumes could be seen during 2025 in some of the largest individual countries — Japan, South Korea and the European Union members as a group — but there are no signs at present of strong growth.

 

Tentative estimates of the large and diversified minor bulk commodity trade segment suggest that growth of around 3% was achieved in 2024, amid higher volumes of industrial commodities. Potential for a further advance this year is visible.

 

During 2024 the world fleet of bulk carriers continued growing at a steady 3% pace, almost unchanged from that seen in the two preceding years, as shown in table 2. Deadweight capacity reached 1,035m at the end of last year. In the current year, higher newbuilding deliveries may be accompanied by somewhat greater recycling activity, resulting in a maintained fleet growth rate.