Global Capesize rates are poised to slide in 2026 as Chinese steel exports seem set to weaken, with the market retreating from its two-year peak. Supply of bulk carriers remains tight and inelastic, but without demand growth — which hinges on China's steel balance — average rates are likely to fall.
A buoyant late 2025 had echoes of the August-October 2024 rally, and both markets reached a ceiling that resulted in coal cargoes being split on to smaller Panamaxes. This could be the case again in 2026, as Panamax rates look likely to remain subdued, although coal's shrinking role in Capesize demand will limit any spillover, leaving the Capesize market increasingly sensitive to iron ore dynamics.
Capesize supply remains fundamentally tight and inelastic, with fleet growth constrained by a thin newbuild orderbook at a time of uncertainty over alternative fuel uptake. Many 15-year-old vessels are scheduled for docking, limiting effective supply.
Tight tonnage helped drive a late November-early December rally, with Pacific rates at their highest since March 2024. But rates have fallen since.
High rates make owners less willing to scrap older bulkers, and some Australian charterers are now fixing older ships than standard. Capesizes loading at key Western Australian hubs were, on average, older than 10 years in 2025, up from 6.2 years in 2017.
On the demand side, iron ore distance travelled could be set to rise, driving up freight rates. Shipowner CMB expects seaborne iron ore tonne-miles (tmi) to rise by 2.8pc in 2026 and then by 2.7pc in 2027 to around 10 trillion tmi. Global bauxite tonne-miles are projected to jump by 12.4pc in 2026 and thenby 11pc in 2027 to over 1.5 trillion tmi.
Iron ore tonne-miles are likely be driven in part by Simandou, which shipped its first two cargoes in late 2025. Simandou could reshape the Capesize market, depending on whether it displaces Australian or Brazilian iron ore. If it displaces Australian cargoes, tonne-miles could soar, lifting rates. If it displaces Brazilian cargoes, tonne-miles could fall.
But Capesize demand is increasingly sensitive to China's steel balance — weak domestic consumption and the outlook for steel exports — as well as aluminium-related bauxite flows. Capesize volatility is likely to continue in 2026, and the average rate over the year could in fact be lower.
Global steel output fell by 4.6pc in November to 140mn t, while Chinese output dropped by 11pc to 69.9mn t. And Chinese steel consumption fell by 5.7pc year on year to 649mn t in January-September.
China has faced 25 steel trade friction cases this year, after 33 in 2024. Its steel exports fell on the year in October for the first time in 2025 — by 12.6pc to 9.7mn t. An export licence system for steel products that will take effect on 1 January could further weigh on volumes.
Shipbroker Clarksons expects Chinese steel exports to fall by 6pc to 115.4mn t in 2026 and to 109.6mn t in 2027, down from 122.8mn t in 2024. This would translate into some 50 fewer Capesize voyages in 2026 and 40 fewer in 2027 — relatively modest reductions.
But portside storage is limited and China's weekly iron ore stocks at 47 ports had already climbed to 162mn t in the week to 19 December — the highest since 2018. With slow steel demand and falling steel exports, this could weigh on the Capesize market in 2026.
And while Guinea's bauxite exports hit 148mn t in January-November, up by 24pc year on year, there might not be a further significant increase as Chinese aluminium output approaches its 45.5mn t/yr limit by the end of 2026.
Capesize rates could stay elevated through what is usually a slow first quarter, supported by tight supply and rising Simandou volumes. But sharp drops and seasonal spikes are likely if Chinese steel exports keep falling as a result of mounting anti-dumping measures and licensing constraints, curbing iron ore demand.
