The Capesize market is currently experiencing a seasonal slowdown. As expected at the beginning of the year, cargo volumes are lower, impacting freight rates, reports Breakwave Advisors.
Tariff Enacted
The market should assign a higher probability to increased cooperation between the United States and China under the new Trump administration. Early indications suggest a more cautious and less aggressive approach to trade policy from the U.S.
While this stance may evolve, there is currently limited evidence to suggest imminent disruptions to the existing trade flow landscape. For the dry bulk sector, the impact of potential tariff implementations is likely to be minimal due to limited exposure to China-U.S. trade routes.
The prospect of a more balanced trade relationship is encouraging and may contribute to a broader normalization of global trade dynamics. Improved trade relations could also support a swifter recovery in China’s economy, which is crucial for revitalizing the country’s real estate sector—a key driver of steel demand.
Way Forward
The last few years have been marked by increased geopolitical uncertainty. It is expected these geopolitical events to continue to impact global trade and significantly influence effective vessel supply. Combined with the potential for a multi-year cyclical rebound in China’s economic activity following recent economic turmoil, dry bulk shipping is likely to experience higher volatility. This volatility will occur against a backdrop of secular tightness driven by stable bulk commodity demand and slower fleet growth due to a relatively low orderbook.
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Source: Breakwave Advisors
