By Ulf Bergman
Depending on perspective, news can be good or bad, and in some circumstances both may be applicable. The latter was very much true when the Chinese statistics authority released the latest batch of the country’s official Purchasing Managers’ Indices (PMI) on Tuesday. The good news was that both the manufacturing and services PMIs were in expansionary territory. On the other hand, the bad news was that they were not by much, with the readings only marginally above contraction.
The PMI for the Chinese manufacturing sector came in at 50.3, slightly above both the consensus and the previous reading. The optimistic take is that the world’s second-largest economy maintains positive momentum despite geopolitical headwinds and tariffs. The pessimist would point out that much of the positivity is driven by stronger-than-expected AI-related exports, while other parts of the sector remain subdued, suggesting the buffer against contraction is limited.
While the manufacturing PMI is coloured by the fortunes of China’s export industries, the PMI for the non-manufacturing sector is more of a gauge for the domestic economy. The June reading delivered a minor surprise, with a small advance to 50.2, rather than the expected modest dip into contraction. Still, the low reading highlights the challenges facing the domestic Chinese economy amid continued weak demand.
Chinese Dry Bulk Imports Rose in the First Half
That Chinese growth has been lopsided in recent years, with exports providing much of the heavy lifting, is hardly anything new. Despite this, and despite GDP growth that is modest by Chinese standards, the country’s annual dry bulk imports have remained on an upward trajectory in recent years.
In 2025, according to data from Signal Ocean, China’s dry bulk imports grew by 2.2 per cent year-on-year. The positive momentum has carried into this year, with total volumes for the first six months of the year 4.3 per cent higher than during the same period last year. However, it is worth bearing in mind that volumes were strong in the second half of last year, following a retreat in the first six months. Hence, there is a degree of base effect in the growth during the first half of this year. Still, volumes were marginally higher than in 2024.
Among the main dry commodities, iron ore, bauxite and grains recorded year-on-year growth during the first half of the year. In contrast, coal declined, albeit not to the same extent as during the same period last year. Iron ore maintained its position as the leading dry bulk import, accounting for 56 per cent of the aggregate, following a 4.7 per cent increase over the past six months. During the same period, bauxite and grains grew by 12.2 and 17.1 per cent, respectively.
Seaborne coal imports fell by nearly six per cent over the period, extending the recent trend of decline. However, as highlighted in Ocean Analytics’ Insights piece last week, the downward trend in monthly volumes ended in May, with discharged volumes in the ports on the rise over the past two months. That said, one should not read too much into the trend reversal, as much of the new demand can be attributed to a deadly mine accident in China and the disruptions to the energy exports from the Arabian Gulf.
The different vessel segments involved in China's dry bulk trade mostly maintained their market shares over the past six months. Compared to the first half of 2025, capesizes saw a slight increase in their market share, while other segments experienced minor declines. Relative to the second half of last year, capesizes continued to dominate, whereas the panamaxes lost some market share. Capesizes made up just under 50 per cent of the trade, with panamaxes capturing a little over a fifth. The dominance of the capesizes highlights the strength of the iron ore and bauxite trades.
The Outlook for the Second Half
Chinese demand for seaborne dry bulk freight typically increases in the second half of the year. Although the PMI data released earlier in the week suggest that the Chinese economy will continue to expand, readings barely above 50 highlight the challenges facing the world’s second-largest economy. This raises the question of how long Chinese dry bulk imports will continue to rise.
Still, there is little to suggest that growth in dry bulk imports will end in the coming months. Over the past three years, growth has ranged from four to thirteen per cent. While last year’s growth of nearly thirteen per cent between the first and second halves is unlikely to be repeated, as it was due to a weak start to the year, volumes should pick up after the summer lull. Additionally, full-year volumes have been edging higher in recent years.
Two scenarios illustrate a potential range of outcomes. In a flat scenario where annual volumes only match 2025 levels, demand for seaborne transport would still rise by about four per cent in the second half compared to the first, while volumes remain nearly four per cent below the same period last year. In a modest-growth scenario, with full-year imports growing by one to two per cent, second-half volumes would be roughly seven per cent higher than the past six months and slightly below last year's strong second half. In either case, the second half should see sequential growth in Chinese dry bulk demand. The key question is whether it will reach last year's levels.
Based on recent seasonal patterns, growth in Chinese demand for dry bulk shipping is likely to favour capesizes, as iron ore imports typically pick up in the second half. While bauxite has been a success story recently, the rainy season in West Africa will keep volumes in check during the third quarter. The uncertainty surrounding the peace deal between the US and Iran may fuel Chinese coal demand and provide some support for panamax and supramax freight rates, but most crystal balls are likely to struggle with this subject.
Data source: Ocean Analytics