- Capesize Drives Dry Bulk Market Momentum.
- China’s Iron Ore Demand Holds Firm Despite Volatility.
- Simandou Project Could Shift Long-Term Iron Ore Dynamics.
Week 23 Market Monitor shines a spotlight on the impressive momentum of the Baltic Dry Index (BDI), primarily fueled by the strong performance of the Capesize segment. A crucial market indicator is the tightening ballaster count in both the North and South Atlantic, coupled with steady Chinese demand for iron ore. Additionally, supply from Guinea is expected to rise, adding to the ongoing shipments from Australia and Brazil, reports Break Wave Advisors.
Chinese Iron Ore Demand Stays Strong
Even with reports suggesting softer flows into China, Capesize iron ore shipments from Australia, Brazil, and Guinea hit around 82 million metric tons in May—an increase of 14% from April. This marks a rebound from February’s low of 59 million metric tons and exceeds March’s volumes of 78.5 million metric tons. Analysts at the Singapore International Ferrous Week pointed out that China’s dependence on iron ore will remain strong in the medium term, thanks to its relatively young fleet of blast furnaces. Traders have also adjusted their bearish pricing forecasts upward to between $80 and $85 per ton, compared to earlier expectations of below $75 this year.
Simandou Project Poses Long-Term Supply Challenges
Guinea’s Simandou iron ore project is on track to start shipments in November 2025 and could potentially deliver up to 120 million metric tons annually once it’s fully operational. However, there are still risks due to political instability and ongoing negotiations with the Guinean government. The increasing ton-mile demand on the Africa–Far East route is already boosting sentiment on the C17 route, which links the Atlantic Coast of Africa to China.
Freight Rates Rise Across Capesize Routes
Capesize freight rates on the Brazil–North China corridor are closely following the Baltic C3 benchmark, having surged 12% week-on-week to around $22 per tonne. This upward trend is expected to persist, bolstered by a decrease in available ballasters in the South Atlantic. This tightening supply situation is enhancing market sentiment, particularly along key long-haul iron ore routes.
Panamax and Geared Segments Show Mixed Performance
Freight rates for Panamax vessels coming from the Continent have been hovering around $31 per tonne. This uptick is largely thanks to better performance on the P2A_82 route (Skaw–Gibraltar to Taiwan–Japan) and the P1A_82 route (Skaw–Gibraltar transatlantic round).
On the other hand, Supramax rates from Indonesia to the East Coast have been stuck below $9 per tonne since mid-May, although we can expect an increase in Supramax vessel arrivals over the next ten days. In contrast, the Handysize segment is lagging, with NOPAC–Far East round voyage rates dipping below $30 per tonne—a significant 18% drop compared to last year. Vessel arrival data indicates that traffic to the Far East is likely to rise for both Supramax and Handysize classes.
Tonne-Day Growth Signals Capesize Upswing
The dry bulk market is seeing some positive movement in tonne-day growth, particularly in the Capesize and Supramax segments. Tonne days for Capesize vessels are approaching levels we last saw in week 10, while Supramax tonne days have noticeably increased since the end of May. This upward trend could pave the way for a stronger rebound in the Capesize sector, especially with the number of ballasting vessels on the decline.
Chinese Port Congestion Eases Further
In early June, dry bulk port congestion in China continued to ease, following the trend we noticed in late May. This improvement is especially evident in the Capesize and Handysize segments. The 7-day moving average for waiting times at Chinese ports for dry bulk vessels is now nearing two days, which indicates ongoing relief. At Caofeidian, one of China’s major Capesize hubs, the average waiting time has dropped below one day, further highlighting reduced congestion and enhanced port efficiency.
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Source: Break Wave Advisors
