HuaYuan Securities: VLCC freight rates reach historical high in September, Ximangdu iron ore mining starts

According to the Zhitong Finance APP, Huayuan Securities released a research report stating that VLCCTD3cTCE will reach USD 96,000/day on September 16, 2025, and maintain a high level in the following days. This freight rate level is the best for VLCC freight rates in September since 1990 (the peak freight rate in September 2004 reached USD 96,000/day). Next week is the last full working week before China's National Day holiday, and the October cargo from the Middle East may be concentrated for shipment, combined with the fact that the available VLCC capacity in the next 30 days will reach the lowest level in the past year. Additionally, it is worth noting that the Ximangdu iron ore project officially commenced mining on September 14, and the first batch of goods is expected to be shipped in November, which is likely to support the bulk shipping market starting from Q4.

The main points of Huayuan Securities are as follows:

VLCC freight rates reach the highest level in September since 1990, and the concentrated release of October cargo from the Middle East combined with tight capacity may help freight rates reach new highs

VLCCTD3cTCE will reach USD 96,000/day on September 16, 2025, and maintain a high level in the following days. This freight rate level is the best for VLCC freight rates in September since 1990 (the peak freight rate in September 2004 reached USD 96,000/day). Next week is the last full working week before China's National Day holiday, and the October cargo from the Middle East may be concentrated for shipment, combined with the fact that the available VLCC capacity in the next 30 days will reach the lowest level in the past year. VLCC freight rates may further rise next week, likely breaking the September freight rate peak since 1990.

Ximangdu iron ore mining starts, the first batch of goods is expected to be shipped in November, which is likely to support the bulk shipping market starting from Q4

The Ximangdu project officially commenced mining on September 14, 2025. The shipping time for the first batch of ore is expected to be in November 2025, with the shipping volume in 2025 expected to reach 2-3 million tons, and plans to gradually reach full production status within the next 30 months. As one of the world's large iron ore projects, Ximangdu iron ore has reserves of over 2.25 billion tons, with an annual output of up to 120 million tons, requiring at least 155 capesize ships for transportation each year, equivalent to 7.6% of the current capesize fleet size.

As of July 2025, the capesize fleet consists of a total of 2,047 ships, of which 119 ships over 20 years old may face elimination. New ship deliveries may barely meet the gap left by old ships (119 new ships delivered from Q4 2025 to 2027), while environmental regulations will also clear the efficiency of existing capacity (annual speed reduction of about 1.0%). The overall supply of the fleet may continue to tighten. With the production ramp-up of Ximangdu iron ore, the capesize ship market may begin to drive the recovery of the bulk shipping market starting from Q4 2025.

Investment Recommendations

With OPEC+ increasing oil production and the production of Ximangdu iron ore, combined with the Federal Reserve's interest rate cuts catalyzing global commodity demand, the tight oil and bulk shipping markets are expected to resonate starting from Q4 2025, with continued upward momentum. It is recommended to pay attention to CMES (601872.SH), COSCO SHIPPING Energy (600026.SH), Haitong Development (603162.SH), HNA Technology (600751.SH), and Air China Ocean (833171.BJ) Risk Warning

Upstream production increase is less than expected, macroeconomic growth is less than expected, changes in trade policies