In the latest Dry Weekly Market Monitor, we delve into the trends of the Capesize iron ore freight market with a particular emphasis on iron ore demand in China. As of May, the Capesize iron ore shipment volumes from Australia, Brazil, and Guinea increased by 14% from the previous month, totaling approximately 82 million metric tons (mt). Notably, February recorded the lowest volume at about 59 million mt, marking a 30% decline from May’s totals. Despite a dip in overall flows, iron ore traders have adjusted their pricing outlook, now anticipating prices between $80 and $85 per ton.
This shift follows earlier expectations of $75 or lower at the year’s onset. Analysts predict steady medium-term demand for iron ore in China, driven by the continued utilization of its young fleet of blast furnaces for the next decade. Looking ahead, the Simandou iron ore project in Guinea has the potential to alter pricing dynamics when it begins shipments in November 2025. This project, housing one of the world’s largest undeveloped high-grade iron ore reserves, could eventually yield up to 120 million mt annually.
However, operational risks linked to political instability and negotiations with the Guinean government pose challenges. Furthermore, the ton-mile demand on the route from Africa to the Far East is gaining traction, buoyed by consistent iron ore shipments to China. This uptick in demand may enhance earnings on the C17 route and bolster sentiment in the Pacific freight markets. Monitoring freight rates, Capesize rates on the Brazil-North China route have remained aligned with the Baltic C3 benchmark.
Recently, these rates climbed by 12%, reaching around $22 per tonne. Meanwhile, Panamax and Supramax freight rates exhibit varied performance, with the Panamax rates nearing $31 per tonne and Supramax rates hovering below $9 per tonne. Overall, assessments indicate an upward trend in vessel arrivals for both Handysize and Supramax ships in the coming days.