With Capesize spot rates at the highest levels since May ’23, hitting just over 21,250 USD/Day mid week, an increase of c.19.2% year on year. We take a look at the iron ore trade, specifically iron ore exports to China as a key driver for Capesize demand so far this year.  

So far this year, It has been a positive year for overall iron ore demand due to strong demand from China. Consequently, there have been increased volumes from the main export regions in Australia and Brazil, in order to meet the rising demand. 

Data from OceanBolt, a Veson Nautical Solution, indicates that Australian iron ore export volumes to China have been strong overall this year with a peak of 71.5 MT in January 2023. For the first eight months of 2023, iron ore exports to China from Australia have increased by c.2.2% year on year to 535 MT. 

Seasonal iron ore exports from Australia to China in million tonnes in 2021, 2022 and 2023 year to date. Source: Oceanbolt

Similarly Iron ore export volumes in Brazil have been rising in order to meet the demand, peaking at 26.9 MT in August, which was an increase of 14.4% year on year. 

Seasonal iron ore exports from Brazil to China in million tonnes in 2021, 2022 and 2023 year to date. Source: Oceanbolt

A more positive outlook towards the Chinese real estate and construction industry has improved demand for iron ore.  Whilst there has been much anticipation surrounding a stimulus package to aid the real estate sector in China, which has been struggling over the past year. Beijing has instead opted for an alternative strategy by adjusting monetary and fiscal policies instead of providing direct cash injections into the economy, laying the foundations for a sustainable path to allow China’s infrastructure development and construction industry to continue to grow.  

Stronger sentiment for this sector has lent support to values and over the last month, Capesize values have increased across all age categories with values for 15YO vessels of 180,000 DWT up by c.4.88% since the start of September from USD 19.86 mil to USD 20.83 mil, according to VesselsValue. 

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