dry bulk index

DNV sees bullish growth in the bulker market in the coming years

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Growing global demand for commodities and an extremely low newbuild activity between 2019 and 2022 have set the stage for bullish growth in the bulker market in the coming years, according to Oslo-based DNV. The world’s leading classification society and a recognized advisor for the maritime industry says bulker owners are taking advantage of these favourable market conditions and starting to invest. According to DNV estimates, between 400 and 500 bulkers will be ordered on average every year over the next five years.

“Demand for iron ore, which has the biggest share of the global dry bulk market, is still strong,” writes Morten Løvstad, Vice President and Global Business Director for Bulk Carriers at DNV. “Even the demand for coal, which has the second-largest share, has remained strong despite forecasts that this would decrease due to the energy transition.”

“On top of this, demand for food-related commodities is actually increasing faster than anything else,” continues Løvstad. For example, demand for soybeans grew by over 10% last year, driven by an expanding world population and changing eating habits.

In China, the largest global importer of dry bulk commodities, the population’s diet is shifting from mainly rice and vegetables to more meat-based. “This resulted in sharp demand increases for soybeans as animal feed, boosting exports of soybeans from Argentina and Brazil to China” Løvstad explained.

BIMCO, the world’s largest international shipping association forecasts dry bulk demand to grow by 2.5-3.5% in 2024 and stabilise at between -0.5% and 0.5% in 2025. Cargo volumes are expected to grow by 0.5-1.5% in both 2024 and in 2025. Iron ore shipments will grow by 1-2% in 2024 and 0.5-1.5% in 2025. They will benefit from a 1.7% and 1.2% increase in global steel demand in 2024 and 2025 respectively as forecast by the World Steel Association. Grain shipments are estimated to grow by 2-3% in 2024 and 0.5-1.5% in 2025.

BIMCO also forecasts that shipments of minor bulk cargoes will increase by 2-3% in 2024 and by 3-4% in 2025. Easing interest rates in advanced economies and the energy transition are expected to support demand. In particular, a stronger US recovery could boost cement shipments, as housing starts increased by 2.1% y/y and permits for new private housing by 3.8% y/y during the first quarter of 2024.