Key takeaways
The first half of the year is on track for the strongest Baltic Dry Index (BDI) performance since 2023.
C3 and C5 rates remain supported by the resilience of Chinese iron ore imports despite weak domestic steel production.
Market attention is increasingly turning towards the evolving iron ore demand dynamics in India.
The first half of the year is poised to deliver the strongest performance on the Baltic Dry Index (BDI) since 2023. While activity on the C3 and C5 routes remains supported by strong demand for Chinese iron ore imports, despite continued weakness in domestic steel production, attention is increasingly turning to India. Recent shifts in demand for Indian iron ore have begun to impact dry bulk trade flows and could become a more important driver of shipping market dynamics in the coming months.
All statements and commentary reflect market conditions as of (Friday, May 29, 2026), unless otherwise stated.
Freight Market Overview | Headshot
The Baltic Capesize Index (BCI) closed at 5,503 points in the last week of May, while the Capesize Timecharter Average (C5TC) averaged $46,000 per day, reflecting a 170% year-on-year increase. At the route level, the C3 route (Tubarao to Qingdao) is valued at US$38 per tonne, up 57% q-o-q and 90% y-o-y, supported by strong Brazil-China iron ore volumes and tighter tonnage availability in the Atlantic Basin. The C5 route (WA to Qingdao) is currently valued at US$16.4 per tonne, up 56% q-o-q and 97% y-o-y, reflecting stronger Pacific market conditions compared to the same period last year.
Spotlight | India: An emerging driver to watch
This year, a new dynamic has begun to show early signs in India-bound cargo flows. The increasing volume of iron ore shipments from major loading centers (primarily Brazil) to Indian offloading ports has begun to absorb the global tonnage. Although it is still too early to draw definitive conclusions, this evolving flow represents an emerging variable. If this trend stabilizes and continues to grow, it could eventually establish itself as a distinct and complementary benchmark for global shipping performance alongside the traditional methods featured in the spot rates summary.
Peak volume recorded in the first quarter (5.0 million tons): Dry bulk flow data for the first quarter of 2026 indicates the highest quarterly cargo volume recorded during the three-year monitoring period, confirming the marked acceleration in trading activity.
Of the record 5.0 million tons imported in the first quarter of 2026, the three largest identified sources accounted for about 54% of total volumes:
Brazil: 1.8 million tons (~36% of total Q1 volume)
Oman: 735,000 tons (~15% of total first quarter volume)
Australia: 164,000 tons (~3% of total Q1 volume)
Strong YoY expansion (+127.3%): Freight volumes rose sharply compared to Q1 2025 (2.2 million tons) and were more than four times higher than Q1 2024 levels (1.1 million tons), highlighting the scale of market growth over the past two years.
Continued strength QoQ (+38.9%): Following the strong momentum observed in Q4 2025 (3.6 million tons), volumes continued to expand into Q1 2026, in contrast to the seasonal decline typically associated with post-holiday trading patterns.
Why did India buy more iron ore from Brazil (key drivers)
Quality mismatch in local supply
Iron ore production in India remains significant, but steelmakers still face constraints in the availability of higher quality materials. Domestic production is heavily weighted towards fines rather than lump ore, creating quality and consistency challenges for large integrated steel mills that require premium, low-alumina raw materials for efficient blast furnace operations. This has led to increased reliance on high-quality imported Brazilian crude, especially among coastal mills.
The growth of steel capacity increases the demand for raw materials
India’s steel sector continues to expand in line with the National Steel Policy target of producing 300 million tonnes of crude steel by 2030-31. The country’s installed crude steel capacity reached over 220 million tonnes in 2025-26, while infrastructure-driven industrial demand remained strong following another increase in public capital expenditure in the 2026-2027 Budget. As steel production rises, the demand for high-quality mineral raw materials is growing faster than the quality of domestic supply can consistently support.
Coastal mills drive import demand
Indian steelmakers with coastal operations were among the strongest drivers of import growth, as imported seaborne crude became increasingly viable compared to the costs of inland sources. JSW Steel, one of India’s largest steel producers, has expanded its production capacity at both Vijayanagar and Dolvi, leading to increased requirements of high-quality imported ore.
Lower seaborne prices have improved import economics
Lower seaborne iron ore prices have improved the attractiveness of imported materials during the first quarter of 2026, especially for coastal steel producers. Higher rail and domestic handling costs also narrowed the landing cost gap between imported and domestically sourced crude, supporting additional purchases from Brazil.
India and Brazil enhance cooperation in mining
In February 2026, India and Brazil signed a Mining and Minerals Cooperation Agreement aimed at strengthening cooperation across exploration, mining, processing, infrastructure, recycling and supply chains in the steel sector. The agreement reflects the intensive efforts made by both countries to improve the long-term security of raw materials and deepen strategic cooperation in the steel value chain.
Additional support for supply risks in the Middle East
Geopolitical tensions in the Middle East also contributed to changing purchasing patterns during this period. Concerns over the reliability of some pellet supply flows from the region have encouraged Indian buyers to diversify their sourcing and rely more on long-haul suppliers, including Brazil.
Request| Display the indicator in tons, miles and billions
Capesize • Cargo: Iron ore (ores and rocks) • Route: All to India • Timeframe: 2-year trend (mid-2024 to mid-2026)
Underlying activity (mid-2024 to early 2025): During the initial phase of the monitoring period, the index essentially established itself at around 100% in mid-2024. While there was a short-term seasonal peak in July, reaching 2.0 billion ton-miles, the market subsequently entered a period of consolidation, maintaining levels near historical lows throughout the winter of 2025 (declining to less than 0.3 billion ton-miles).
Key inflection point (spring 2025): There was a significant shift in demand dynamics starting in April 2025. Iron ore shipments to India began a sharp upward trajectory, which continued through the second quarter, eventually peaking at around 300% (2.9 billion ton-miles) by July 2025.
Record volume (early 2026): After a temporary correction in late 2025, when the index fell to about 150% (about 1.5 billion ton-miles), the market entered a period of exceptional growth. Demand accelerated sharply, pushing the index to a record high of about 450% in early 2026, the highest level recorded in the past two years, equivalent to about 4.2 billion ton-miles. Since reaching this peak, volumes have eased slightly but remain at historically high levels, averaging about 420% in May, or approximately 3.5 billion ton-miles.
Absolute Capesize ton-mile (show index)
Metric Description: Displays the index (base 100) by total mileage during the selected period. This facilitates comparisons of relative performance between sectors of different sizes (for example, comparing Supramax versus Capesize growth rate).
Source: Al Ishara Group
