The dry bulk market remains robust heading into September, with Capesize earnings showing resilience supported by firmer iron ore prices, steadier mill margins, and optimism around both China’s economic policy stance and potential US FED rate cuts.
While macroeconomic signals from China remain subdued, freight sentiment has stayed strong, reflected in both spot earnings and secondary market activity. Meanwhile, smaller geared bulkers are experiencing a parallel upswing, driven by surging Chinese steel exports and increased regional demand across Asia.
Cape Momentum Reinforced by Market Dynamics
As of 15 September, the Capesize 5TC (C5TC) index hovered near $26,000/day, trending higher on sustained ore replenishment demand. The Panamax 5TC (P5TC) has also strengthened, reaching a year-to-date high of $18,000/day and nearing the $20,000/day mark last seen in March 2024. Forward market spreads are at multi-year highs, with the C5TC–P5TC differential trading at ~$4,000/day for 1Q26 and ~$7,000/day for 2Q26.
Investor interest has followed freight resilience. August saw a surge in Cape secondhand activity, with transactions doubling month-on-month and average vessel age of just 13 years, highlighting confidence in vessel trading life. Asset values for five- and ten-year-old Capes are up 3.6% and 9.3% YTD respectively, contrasting with weaker sub-Cape valuations. With the orderbook-to-fleet ratio steady at 10.3% and demolition activity subdued, forward supply remains contained, further underpinning Cape momentum.
Geared Bulkers Benefit from Steel Export Strength
Smaller geared vessels, including Supramaxes and Handysizes, are also enjoying renewed support. As of late August, the P5TC, S10TC, and HS7TC indices all reached the 100th percentile of their past 50-week ranges. Chinese geared exports rose sharply by +25.4% y-o-y in Jan–Aug, reducing ballast inefficiencies in the Far East.
Regional strength is also broad-based, with Japan (+17.7%) and South Korea (+10.2%) contributing significantly via steel stems. YTD, the S10TC and HS7TC have averaged $10,847/day and $10,653/day respectively, with September tracking above historical averages. Combined with softer asset prices, improving earnings make Handysizes an attractive option for investors seeking diversified exposure alongside Capes.
The dry bulk market is being driven by a dual narrative: sustained strength in Capes supported by tight supply and forward optimism, and a parallel resurgence in geared bulkers thanks to strong steel export flows.
With Cape forward spreads widening and geared utilisation firming, opportunities exist for both strategic positioning in larger vessels and selective entry into smaller units. Together, these dynamics point to a resilient market heading into year-end, despite broader macroeconomic uncertainties.
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Source: BRS
