Sealand Securities Co., Ltd. (000750) has released a research report indicating that iron ore, coal, and grains have long held a dominant position in global dry bulk shipping turnover. In the short, medium, and long term, multiple cargo types—including coal, grains, iron ore, steel, and cement—are supporting upward demand momentum.
Looking ahead, the retirement of older vessels is expected to offset new ship deliveries, leaving limited growth in effective fleet capacity. Since the start of 2026, the Baltic Dry Index (BDI) has followed a pattern of "peaking in May, correcting in June, recovering in July, and rising in August." Considering that the release of longer-haul cargo volumes will boost ton-mile demand, combined with constrained supply, the brokerage believes the dry bulk freight rate center is likely to trend higher and has maintained its "Recommended" rating for the shipping and port sector.
What drives profitability in dry bulk shipping?—Ton-mile demand forms the foundation, while freight rates provide the flexibility
Dry bulk shipping primarily transports iron ore, coal, grains, and other commodities. The brokerage argues that demand is jointly determined by shipping trade volumes and voyage distances, while supply depends on fleet size and effective capacity. The interaction between supply and demand dictates freight rates, which in turn influences industry profit levels. Iron ore, coal, and grains have consistently been the cornerstone of global dry bulk trade turnover over the long term.
What does future demand look like?—Multiple cargo types support upward demand across short, medium, and long horizons
In the short term, a strong El Niño event could increase demand for coal-fired power as a substitute, intensify hydrological constraints at the Panama Canal, and coincide with the peak North American grain shipping season, potentially unlocking elasticity in coal, grain demand, and route diversions. In the medium term, new iron ore volumes from Simandou and Vale are gradually materializing, and longer-haul cargo sources are expected to significantly amplify ton-mile demand. If Simandou's full production capacity were shipped entirely to China and replaced Australian ore on a one-for-one basis, the brokerage estimates it could generate approximately 2.7% incremental demand for dry bulk shipping. In the long term, potential post-war reconstruction in Russia-Ukraine and the Middle East provides an upward option for transporting raw materials such as steel and cement.
What about future supply?—Older vessel retirements offset new deliveries, limiting effective capacity growth
According to Clarksons, the shipbuilding cycle for bulk carriers is approximately 3-4 years. As of August 2026, the order book represents 14.2% of existing fleet capacity, and shipowners' willingness to place new orders remains low. Meanwhile, vessels aged 15 years or older account for 34.8% of capacity, and those aged 20 years or more account for 11.9%. Older ships face higher maintenance and operating costs. Considering potential scrapping and delivery schedules, supply-side expansion is expected to remain relatively moderate.
What is the current freight rate trend?—The center continues to climb with overall upward volatility
As of August 14, 2026, the BDI closed at 2,863 points, up 40.1% year-on-year. Although it fell 7.3% week-on-week, it remains at a relatively high level for the year. Since the beginning of 2026, the BDI has followed a "May peak, June pullback, July recovery, August advance" trajectory, driven primarily by the BCI. With the recovery of cargo volumes from Australia and Brazil and tightening regional capacity, the freight rate center is expected to remain at elevated levels.
Investment recommendation
Sealand Securities highlights Haitong Development as a low-valuation, steady-growth opportunity, suggesting investors position at lower levels. The company achieved a net profit attributable to shareholders of 523 million yuan in the first half of 2026, up 502.60% year-on-year. Overseas operations contribute the majority of profits, and the company's gross profit is highly correlated with freight rate movements. According to Clarksons, as of August 15, 2026, the company owns 66 vessels and continues to expand through its "Hundred Ship Plan." The brokerage forecasts net profits attributable to shareholders of 1.207 billion yuan, 1.404 billion yuan, and 1.620 billion yuan for 2026-2028, corresponding to P/E ratios of 13x, 11x, and 10x, respectively, maintaining a "Buy" rating on Haitong Development. Given that longer-haul cargo release will drive ton-mile demand growth, coupled with constrained supply, the brokerage believes the dry bulk freight rate center is poised to rise and maintains its "Recommended" rating for the shipping and port sector.
Risk warnings: Simandou iron ore shipping demand falling short of expectations; coal, grain, and other cargo shipping demand underperforming; industry capacity growth exceeding expectations; company fleet expansion missing targets; vessel purchase prices exceeding expectations; exchange rate fluctuation risks; earnings forecasts for key covered companies falling short; and El Niño effects being weaker than anticipated.