The signs are positive for the Capesize freight market, given the increase in iron ore supply from Australia, Brazil, and West Africa.
In Australia, BHP will invest 1.4 billion Australian dollars in the port of Hedland in order to maintain its export capacity at 305 million tons annually. At the same time, Vale recorded production of 94.4 million tons of iron ore in the third quarter, the second strongest quarter since 2018. Favorable weather conditions strengthened exports from Ponta da Madeira and Tubarao, solidifying Brazil’s position in the Atlantic-Asia trade.
In West Africa, Guinea is preparing for the first export of iron ore from the ambitious Simandou project. The long-awaited project could redefine trade patterns, placing West Africa on the map as a long-distance supplier for China.
The impact of the above developments is clear for the freight market. The increase in iron ore supply has contributed to a 25-30% increase in ton-days since the beginning of 2025. This increase reflects the strengthening of long-distance activity and the greater absorption of tonnage, supporting the performance of the Capesize freight market and the sustained recovery of the BCI. The continued expansion of these export flows, especially from projects like Simandou, is expected to further strengthen ton-mile demand and gradually balance the trade dynamics between the Atlantic and Pacific.
Despite the positive news from the iron ore supply side, China’s weakened macroeconomic prospects could act as a counterbalance to the freight market. The world’s largest iron ore importer continues to face problems, due to stagnation in the real estate sector and compression of profit margins in steel mills, two factors that limit demand for inventory replenishment. Throughout 2025, Chinese iron ore imports on a monthly basis are moving upwards compared to 2024. However, this increase in imports is occurring during a period of low domestic steel demand and seasonal production slowdown. The increase in port inventories, combined with the lack of substantial economic stimulus measures from Beijing, has resulted in spot prices being under pressure. As winter maintenance reduces steel production, the continued inflow of cargoes risks widening the imbalance between supply and consumption, reinforcing the downward trend in the iron ore market.
Source: Signal Ocean
