- U.S. Dry Bulk Trade Faces Pressure as China Retaliates with Tariffs.
- Tariffs Threaten U.S. Grain and Coal Flows to China.
- New Chinese Tariffs Reshape U.S. Dry Bulk Export Landscape.
China hit back on April 4th by declaring a 34% tariff on imports from the U.S., with effect from April 10th. The step is a retort to America’s recent protectionist policies and represents a stark increase in tensions between the two nations. Top U.S. dry bulk shipments most importantly soybeans and corn are set to be drastically affected, reports AJOT.
Grain Trade Under Threat: China Dominates U.S. Grain Imports
China is still the leading purchaser of U.S. grain exports to the Far East, based on Q1 2025 figures:
- China: 52.8%
- Japan: 23.3%
- South Korea: 9.0%
These exports are heavily dependent on Panamax ships (59.2%), followed by Supramax (34.2%). The leading commodities are:
- Soybeans: 43.5%
- Corn: 29.5%
- Wheat: 20.5%
But U.S. grain exports to the Far East are already falling:
- -29.69% quarter-on-quarter (Q1 2025 vs Q4 2024)
- -18.62% year-on-year (Q1 2025 vs Q1 2024)
This downward trend will intensify under the new tariffs, with China set to shift to alternative suppliers such as Brazil. Southeast Asia is likely to absorb some of the diverted U.S. volumes, but it is unlikely to fully compensate for the loss.
U.S. Coal Exports Can Also Be Impacted
China is 10.3% of U.S. coal exports and the second-largest Asian destination after India (25.2%). The trade-in coal is divided between:
- Metallurgical coal: 54.4%
- Thermal coal: 45.6%
Even though modest recent drops:
- -1.46% QoQ
- -2.52% YoY
The levying of a 15% tariff on U.S. coal might impact competitiveness, particularly as China already imports large volumes of coal from Australia, Russia, and Indonesia.
Market Reactions: Grain Prices Fall, Coal Stable
U.S. soybean futures fell 4% outright after the tariff announcement, led by expected cuts in Chinese demand. China’s overall push to limit foreign grain purchases barley and sorghum included—is adding to price pressures.
On the other hand, the market for coal was somewhat stable, with seaborne and coking coal prices not affected in the short term. The restricted percentage of U.S. coal in Chinese overall imports and the fast rerouting of shipments to India kept the drop from being sharper.
Freight Market: Contrasting Trends by Vessel Segment
Capesize
- Rates from Brazil to North China:
- $20/tonne, -10% on last month
- Congestion: 112 vessels (+5 WoW)
Ballasters (SE Africa): 96 ships (increased from 80 two weeks ago, still under average of 110) - Tonne-days growth: Slight decline since Week 11 end
Panamax
- Continent freight rates:
- $30+/tonne, down 6% WoW, but up 8% MoM
- Congestion: 180 ships (+8 WoW)
- Ballasters (SE Africa): Close to 100 (30 below yearly average)
- Tonne-days growth: Steady uptrend, similar to late-March levels
Supramax
- Indo–ECI route freight rates:
- Close to $9/tonne, up 13% MoM
- Congestion: Close to 300 vessels (down by 6 WoW)
- Ballasters (SE Asia): Below average for the year so far after the post-Week 13 peak
- Tonne-day growth: Increasing faster than during Week 11
Handysize
- Freight rates NOPAC–Far East:
- $30+/tonne since end Feb, up by 8% MoM
- Congestion: 200+ vessels (+12 WoW)
- No. of vessels (NOPAC): 98 vessels, uptrend since Week 11
- Tonne-day growth: Increased steadily since the end of Week 2
Outlook: Market Volatility Likely to Endure
While the dry bulk market is resilient to some extent in certain segments, the full brunt of China’s tariffs is yet to be witnessed. The Panamax and Supramax markets of Southeast Africa are reflecting soft signs of downward revisions, whereas Capesize tonnage pressure is building steadily.
Continuous uncertainty related to trade flows, demand changes, and freight rates indicates that volatility will continue across vessel classes and commodity markets shortly.
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Source: AJOT
