- Fleet Growth and Rising Demand to Drive Capesize Rates Higher in 2025.
- Simandou Project and Long-Haul Trade to Influence Capesize Market.
- Capesize Rates Expected to Surpass $19,000 – $21,000 Range in 2025.
The outlook for 2025 of Dry Bulk and Tanker markets has much promise in store – full of volatility and emerging trends within global trade. Fleet dynamics, commodity demand, and geopolitical factors will define the trajectory of both sectors, as presented during Breakwave Day 2024, reports Break Wave Advisors.
Fleet Growth and Capesize Rates
The dry bulk sector is expected to see the lowest fleet growth, which, combined with expanding demand for commodities like iron ore, coal, and bauxite, is projected to drive Capesize rates higher. Serena Piazza, Senior Research Analyst at Ifchor Galbraiths, explained: “We expect the lowest fleet growth of the entire dry bulk sector, together with expanding demand for iron ore, coal and bauxite, to drive Capesize rates higher.” Key projects, such as Guinea’s Simandou mine and Australia’s Onslow initiative, are set to boost long-haul trade and ton-mile demand.
Outlook for Simandou Project
However, Liz Gao, Iron Ore Analyst at CRU, noted that growth might be flat: “We expect next year to be relatively flat compared to 2024 as the Simandou project will take years to be fully ramped up.”
Burak Cetinok, Arrow’s Analyst, was more positive, projecting slightly higher Capesize rates: “I’m slightly more positive about Capes and think they would average slightly higher, and my expectation is roughly about $19,000 – $21,000 range and think we could be surprised to the upside.”
Challenges for Panamax Rates
While opportunities exist for large vessels, the outlook for Panamax rates remains grim. Jeff Landsberg, President at Commodore Research & Consultancy, forecasted: “Panamax rates will suffer next year, and they will pull down or keep a lead on Capesize rates.”
Tanker Market: Week 2024 and Hope for Recovery
The tanker market struggled in 2024 due to weak demand, structural changes in key markets like China, and the rising dominance of the shadow fleet.
Nadia Martin Wiggen, Director at Svelland Capital, cited weak Chinese demand and the increasing influence of the shadow fleet: “Refinery outages in Russia resulted in additional crude exports, but they primarily benefited the shadow fleet.” This, along with negative demand growth in China, created limited opportunities for mainstream tankers.
Structural Shifts in Oil Demand
Richard Matthews, Consultant at Gibsons Shipbrokers, emphasised that the problem in 2024 was demand, not supply: “This year’s problem wasn’t supply. It was demand. Chinese crude oil imports have fallen, while structural changes like LNG trucking and EV adoption constrained oil demand.” Matthews also highlighted that ton-mile demand suffered as China shifted to Middle Eastern crude, reducing the need for longer Atlantic routes. Analysts are cautiously optimistic for a recovery in 2025, driven by growth in production and increasing demand from Asia. Jonathan Staubo, Oil Tankers Advisor at Fearnleys, suggested that production growth would drive tanker demand: “Production growth historically drives tanker demand, and we expect stronger contributions from Brazil and the Americas next year.”
Anastasia Zania, Tanker Analyst at Energy Aspects, also pointed to Asia’s refining capacity as a driver for demand: “Asia will lead global demand next year, driven by 0.6 million barrels per day of new refining capacity.” This, combined with increased flows from the US and Brazil, should provide a boost to VLCC demand.
Risks for Tanker Market Growth
Despite the positive outlook, risks remain, particularly from structural changes in China’s demand. Richard Matthews warned that Chinese demand would remain constrained due to structural changes: “Chinese demand will remain constrained due to structural changes, and there’s a risk we’re overestimating total demand growth.”
Freight Rates: Stronger in 2025
Freight rates in 2025 are expected to strengthen, particularly for VLCCs, due to limited fleet growth and higher production. Jonathan Staubo forecasted VLCC rates between $50,000 and $60,000 per day: “It’s very easy to see why rates will exceed current forward market expectations,” he said. Anastasia Zania agreed, suggesting that “markets are currently underpriced, and we expect significant volatility.”
Healthy Rate Levels Expected
Nadia Martin Wiggen said: “$45,000 to $50,000 per day is a healthy level, considering supply and demand fundamentals.”
Richard Matthews noted, “Forward curves are undervalued due to bearish sentiment, but the fundamentals – zero fleet growth, high oil supply, and geopolitical risks – point to upside potential.”
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Source: Break Wave Advisors
