Iron ore producer Rio Tinto has loaded a fifth cargo from its Simandou project in Guinea, bringing total shipments from the mine to around 1mn t. A sixth vessel is currently loading at Morebaya port and a seventh is on its way. But the project's impact on the spot Capesize market remains limited, with most of the effect so far confined to the forwards market, market participants said.
The first shipment of iron ore from Simandou — on the Winning Youth bulk carrier — left Morebaya on 2 December and arrived at Majishan in China in January. Four further cargoes have departed Morebaya with iron ore from Simandou since then. The Great Sui set sail on 20 December and has recently arrived at Majishan.
This was followed by the Winning Spirit on 13 January, the Heng Sheng on 27 January and the RTM Cartier on 5 February. The combined deadweight of these five vessels is 974,880dwt, or almost 1mn t dwt.
The Heng Sheng spent five days at anchorage at Morebaya before completing loading, marking a notable acceleration in operations at the port. The RTM Cartier departed the port 13 days after arrival, data from trade analytics firm Kpler show.
The JSW Salem arrived at Morebaya on 10 February, to load the sixth cargo of iron ore produced at Simandou. And the Sunny Mamou is ballasting towards Morebaya, according to Kpler.
Simandou started operations at the end of last year and was widely viewed as a milestone for the Capesize market. But the project's impact on spot rates has so far been minimal, and it is having a greater influence on forward freight agreements (FFAs), market participants said. A rally in spot rates at the start of this year was instead largely driven by a surge in bauxite shipments from Guinea. Atlantic Capesize rates on the bellwether Tubarao to Qingdao route jumped to $26.20/t at the end of January, after falling to $18.60/t on 14 January. Rates fell at the start of February then rose again to $24.50/t on 12 February, on the back of a sharp increase in Guinean bauxite shipments because mining licences were restored to some producers — including Guinea producer Sunda Mining.
The impact of Simandou's start-up on spot freight rates remains minimal, given that only five cargoes have loaded so far. But Simandou cargoes will soon impact the spot freight market too, as overall exports ramp up, market participants said. FFA prices are already being driven higher and are at around $30,000/d for the second and third quarters, market participants said.
Simandou's expected impact on the spot market was overestimated, a market participant said. "The market is pricing bauxite plus Simandou [iron ore] as if every tonne will appear immediately and be lifted by Capesizes and Newcastlemaxes, and as if Guinea will operate flawlessly. Historically, this has never been the case, so the probability of a correction is extremely high."
In addition, bauxite prices in China have slipped owing to a surplus of available material, which could limit demand for west African bauxite. Chinese iron ore port stocks remain at record highs as steel output has fallen, providing a further brake to the Capesize market.
Most vessels used for Simabdou exports so far are in house so have not appeared on the spot Capesize market. "There may be occasional Simandou spot cargoes in the future, but these would indicate a scheduling mismatch rather than a structural change and are unlikely to move the broader market," a market participant said.
Australia or Brazil?
Simandou exports could displace Australian or Brazilian market share in China, which would could significantly increase global tonne miles.
"The near-term impact is more likely to fall on Australia. Beijing has closer long-term alignment with Brazil through the Brics political grouping. Australia is more closely aligned with the US," a source said.
Sliding Chinese steel output and falling iron ore prices may further undermine iron ore demand. In this context, the limited number of Simandou cargoes is unlikely to provide meaningful support to freight rates, especially in 2026, as buyers are increasingly focusing on lower-grade ores.
Rio Tinto suspended production at Simandou after the death of a contractor working at the site on 14 February. But this is not expected to disrupt export loadings, market participants said.
