Two leading dry bulk market analysis firms believe that the Capesize bulker market in the current cycle may be approaching its profit peak, with 2026 expected to be the peak year of this cycle. However, as a wave of newbuilding deliveries concentrates in 2027, the market’s supply-demand balance could gradually shift against shipowners.
Alexis Ellender, Senior Analyst at Kpler Dry Bulk Insights, told TradeWinds on the sidelines of the SGX Iron Ore Conference in Singapore that sustained strong iron ore demand from Asia, coupled with a relatively moderate pace of Capesize newbuilding deliveries, is supporting the resilience of current freight rates and pushing the market into a structurally tight phase.
He noted: “From a profitability perspective, 2026 could be the peak range for Capesize vessels, as this period sits precisely at the ‘sweet spot’ where market demand remains high while capacity has yet to be significantly released.”
This assessment is also partially corroborated by the latest market report from Greek shipbroker Allied QuantumSea. According to the firm’s data, the Baltic Capesize 5TC index average in the first quarter of 2026 surged 77% year-on-year to $22,950 per day, while the average earnings for the first half of 2026 stood at approximately $29,400 per day, nearly doubling from the same period last year.
Pavlos Fakinos, Freight Market Analyst at Allied QuantumSea, pointed out that even against a backdrop of rising fuel costs and geopolitical uncertainties pushing up voyage expenses, the Capesize market maintained considerable resilience in the first half of 2026, with core support still stemming from the robust fundamentals of the iron ore trade.
In terms of short-term fluctuations, the freight rate decline in June is widely viewed as a technical correction following the rapid earlier rally, rather than a trend reversal. Ellender emphasized that the previous pace of rate increases was too fast, with levels temporarily deviating from a sustainable range, making the periodic pullback a natural market self-correction process.
Meanwhile, he also noted that Australian iron ore exports tend to decline after the seasonal peak, with some vessels ballasting in the Pacific region awaiting cargoes, thereby exerting some pressure on spot rates. However, this gap is expected to be gradually offset by growth in exports from Brazil and West Africa, particularly as projects in Guinea ramp up, leading to a rebalancing of global cargo flow structures.
Ellender therefore remains relatively optimistic about the Capesize market for the second half of 2026, stating that overall iron ore demand remains at a robust level. From a seasonal structure perspective, Australian cargo volumes will gradually peak after mid-year, while Brazilian exports will support market performance in the third quarter, with potential additional support in the fourth quarter as West African exports from Guinea recover.
Notably, Allied QuantumSea data shows that iron ore production from the Simandou project climbed to a阶段性 high of 2.2 million tons in May this year, and is expected to continue its growth trend, gradually enhancing West Africa’s presence in the global iron ore supply landscape.
However, beyond the near-term strong expectations, the market’s outlook for 2027 is markedly more cautious. Ellender pointed out that while a cliff-edge drop in earnings in 2027 is not anticipated, the large Capesize orderbook and the concentrated release of future newbuilding capacity could exert sustained pressure on the market, gradually weakening the current tight supply-demand structure.
This view is echoed by Allied QuantumSea. Pavlos Fakinos stated that the key variable over the next two years lies in the timing mismatch—specifically, the alignment between newbuilding delivery schedules and actual cargo volume growth. He emphasized that although Simandou is continuously setting production records, it is still insufficient to replace the dominant role of Australia and Brazil in the global iron ore trade, and therefore cannot significantly alter the global ton-mile demand structure in the short term.
On the supply side, Kpler data indicates that 79 Capesize vessels are expected to be delivered in 2027, nearly double the 44 deliveries projected for 2026, while 16 new vessels had already been delivered in the first five months of 2026. In terms of newbuilding prices, according to VesselsValue data, the benchmark price for a Capesize newbuilding in May 2026 was approximately $81 million, a significant increase from $70.9 million a year earlier, reflecting shipowners’ continued strong expectations for future capacity demand.
Against this backdrop, shipowners continue to place new orders, partly because the voyage distance from Simandou to China is roughly three times that of the Australia-to-China route, significantly extending voyage cycles and thereby boosting structural demand for Capesize and VLOC fleets on a ton-mile basis.
However, both firms caution the market against over-relying on Simandou’s short-term profit-boosting effect. Although the project is growing into one of the new pillars of global iron ore supply, its substantive reshaping of the global seaborne trade structure will take time, with the truly scalable impact likely becoming clearer only around 2030.
