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Drewry Forecasts Stronger Dry Bulk Earnings Amid Regulatory and Market Shifts

Maggie Johnson

By Maggie Johnson

January 15, 2025


Image Credit: “Warehouse With Stock on Metal Shelves,” available at pexels.com (01/15/2025).

According to maritime research firm Drewry, the dry bulk shipping sector is on track for stronger earnings in 2025, driven by a combination of environmental regulations affecting vessel supply and steady demand for key commodities.

Drewry's analysis underscores the resilience of the dry bulk market, particularly in the coal and grain trade sectors, despite lingering concerns about global economic growth. Even as industrial activity in Europe remains subdued, the potential interest rate cuts by the European Central Bank could spark a resurgence in industrial output, bolstering shipping demand.

China's role in the dry bulk market presents a mixed outlook. Domestic steel consumption is forecast to remain weak, but increased steel exports to distant markets may boost shipping demand. Additionally, China's thermal coal, grain, and bauxite imports are expected to stay robust, with high power consumption sustaining coal import volumes. This strength in imports supports the overall resilience of the sector.

A significant shift in global trade patterns is on the horizon, triggered by China's recent approval of Brazilian sorghum imports. As the world's largest sorghum importer, consuming around seven million tonnes annually, China's move to diversify its supply sources could reshape traditional trade routes. This development could have a profound influence on shipping lanes and demand in the years to come, necessitating a keen awareness of these potential changes.

The impending U.S. presidential transition adds another layer of complexity to the market. Drewry notes the potential for renewed trade tensions between the U.S. and China, particularly in the soybean trade, which could disrupt trade flows in early 2025. However, the firm believes that any negative impacts on the shipping market will be less severe than those experienced during 2016-2020.

Global shipping patterns are also being influenced by the ongoing rerouting of vessels through the Cape of Good Hope. While traffic through the Panama Canal is returning to normal, geopolitical tensions and extended voyage durations are reducing available vessel supply, supporting freight rates.

A key factor shaping the 2025 outlook is the introduction of new environmental regulations, such as the FuelEU Maritime regulation, set to take effect in January 2025. While the immediate cost impact of compliance may be minimal, Drewry predicts that the resulting changes in shipping practices will fragment the charter market and drive up regional freight costs over time.

Looking ahead, Drewry projects a promising outlook for charter rates in 2025. With modest growth in vessel supply and steady demand for bulk commodities, the market is poised for a positive trend. Despite potential challenges posed by U.S. trade policies, Drewry anticipates their impact will be less severe than in past years, allowing the dry bulk market to capitalize on new opportunities and maintain its upward trajectory.

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