- The dry bulk market is expected to improve modestly in 2026 as geopolitical pressures ease.
- Stabilising trade policies and reduced tariff uncertainty are supporting stronger market sentiment.
- A large newbuilding delivery wave and shorter voyage distances pose downside risks.
After a challenging period shaped by geopolitical disruptions and trade uncertainty, the dry bulk market is entering 2026 on a more constructive footing. Market sentiment in 2025 was driven more by policy shocks than by demand–supply fundamentals, but conditions have begun to stabilise in the second half of the year. Easing trade tensions, including recent policy softening and a tariff truce between the US and China, have reduced the risk of sudden trade shocks. As macro conditions calm, fundamentals are gradually reasserting themselves, setting the stage for a cautiously stronger freight environment in 2026.
Upside Drivers Supporting the 2026 Market
Bauxite Growth Strengthens Capesize Prospects
Global bauxite exports are expected to rise by 8.6% in 2026, driven primarily by strong demand from China and Europe. Guinea has already reached a new export high, supported by robust aluminium demand in China, and plans further production increases.
However, some downside pressure remains, as expanding output from Guinea, Indonesia, and Australia could lead to oversupply, moderating export growth. Australia is projected to increase bauxite production into 2026–27, with output levels remaining high. Demand is supported by growth in green infrastructure and electric vehicle-related aluminium use, though lower alumina prices and oversupply continue to weigh on the market.
India’s aluminium sector is also contributing to rising bauxite imports, reinforcing demand momentum into 2026.
Soybeans Drive South American Export Momentum
South America is set to play a major role in dry bulk demand growth in 2026, led by record soybean production. Brazil’s 2025–26 soybean crop is expected to reach 178 million tonnes, supported by rapid planting progress and early seeding.
This early harvest schedule gives Brazil a strong export advantage in the first quarter of 2026. At the same time, Argentina’s soybean exports have rebounded sharply following a temporary suspension of export levies. Export volumes for the 2025–26 season are projected to rise significantly, with China accounting for the majority of shipments, adding substantial long-haul demand to the dry bulk market.
India’s Steel Expansion Fuels Coking Coal Demand
India’s coking coal imports remain one of the most reliable demand drivers for dry bulk shipping in 2026. As steel production continues to expand and new blast furnace capacity comes online, reliance on imported coking coal is expected to deepen.
Imports are already approaching record levels in 2025, creating a strong base for sustained growth into 2026. Domestic coal grades lack the metallurgical quality required for steelmaking, reinforcing dependence on long-haul imports from Australia, the US, Russia, and South Africa. Major capacity expansions by leading steel producers are expected to further boost import volumes.
Downside Risks That Could Limit Market Gains
Newbuilding Deliveries Add Supply Pressure
The most significant structural headwind for the dry bulk market in 2026 is the volume of new vessel deliveries. More than 600 ships are scheduled to enter service, marking the largest influx of new tonnage in over a decade.
This delivery wave is concentrated in mid-size segments, reflecting earlier ordering cycles now reaching completion. As these vessels will be delivered regardless of market conditions, fleet supply is set to rise materially, potentially offsetting steady demand growth.
Limited Impact from Iron Ore Imports
India’s iron ore imports surprised on the upside in 2025, supported by strong steel output and tight domestic supply. However, volumes remain too small to materially influence global dry bulk demand in 2026, with only a marginal tonne-mile contribution.
Similarly, Guinea’s Simandou iron ore project, while structurally significant in the long term, will remain in early ramp-up mode during 2026. Initial shipments are expected, but volumes are unlikely to tighten the Capesize market meaningfully in the near term.
Red Sea Stability May Reduce Tonne-Mile Demand
A potential downside risk also stems from improved security conditions in the Red Sea following a ceasefire aimed at stabilising the corridor. If the Suez Canal route fully reopens, vessels would no longer need to reroute via the Cape of Good Hope.
This would significantly reduce voyage distances, particularly for Panamax and Supramax vessels, releasing capacity back into the market. The unwinding of tonne-mile inflation that supported freight rates in 2024–25 could place downward pressure on charter rates in 2026.
Conclusion
Overall, 2026 is shaping up to be a calmer and more balanced year for the dry bulk market compared with the turbulence of 2025. While upside demand drivers provide support, especially from bauxite, soybeans, and coking coal, supply-side pressures and shorter trade routes will temper gains. The market outlook points to gradual improvement rather than a sharp rebound, with fundamentals playing a stronger role as geopolitical uncertainty fades.
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Source: Drewry
