Stock Analysis
General
Library
1) Executive takeaways
First cargo late-2025; staged ramp-up. Guidance points to first shipment around Nov/Dec 2025, ramping toward ~120 Mtpa over ~30 months.
Ton-mile boost is the story. West Africa (Guinea) → North China is ~11.2k nm one-way—about 3× Australia → China—so the same tons create far more ton-miles, a direct positive for Capesize/Newcastlemax demand.
Supply backdrop is tight. Dry bulk orderbook is roughly ~10–11% of fleet; Capesize ~8–11%—historically lean. Slower steaming and environmental rules further cap effective supply.
If Simandou delivers, long-haul iron-ore flows arrive into low net fleet growth—a constructive setup for rates.
2) Simandou in brief
What: One of the world’s largest undeveloped high-grade iron-ore deposits in southeast Guinea.
Who: Simfer JV (Rio Tinto & partners incl. Chalco/CIOH + Govt of Guinea) on Blocks 3–4; Winning Consortium Simandou (WCS) on Blocks 1–2.
How: A new ~600–670 km railway across Guinea to a new Atlantic deep-water port; early exports likely supported by offshore transshipment to Capesize.
When: Targeting first exports late-2025, then a staged ramp to nameplate capacity.
Rule-of-thumb: At ~120 Mtpa and flows to China, Simandou equates to ~600 Newcastlemax-sized cargoes per year and on the order of ~150 ship equivalents of activity (assumes ~200kt cargoes, realistic speeds/port times).
3) Why ton-miles matter here
Illustrative one-way distances to Qingdao (China):
Australia (Port Hedland → Qingdao): ~3,541 nm
Brazil (Santos → Qingdao): ~11,308 nm
Guinea (Conakry → Qingdao): ~11,182 nm
→ West Africa ≈ Brazil in distance and ~3× Australia, multiplying ton-miles for any given tonnage.
Back-of-the-envelope (illustrative):
Nameplate volume: 120m t/yr → ~600 Cape/Nmax voyages (@ ~200kt)
One-way ton-miles: ~1.34 trillion (120m × ~11,182 nm)
Round trip ~22,364 nm; at ~4 cycles/yr → ~150 ships effectively employed
(Actuals vary with routing, speeds, weather, waiting times, and discharge ports.)
4) Ship classes most used for iron-ore transport (quick guide)
Capesize (≈170–190k dwt)
Workhorse of the seaborne iron-ore trade (Australia/China, S. Africa/China, etc.). Typical cargo ~170–180kt; requires deep drafts and large terminals.Newcastlemax (≈200–210k dwt)
Optimized to the “Newcastle” port constraints; typical iron-ore cargo ~200kt. Many new eco ships here; prime candidate for Simandou’s long-haul flows.Panamax/Kamsarmax (≈75–85k dwt)
Less common for long-haul iron-ore; more typical for regional ore or bauxite (note: Kamsarmax is the standard for Guinea bauxite from Kamsar).
Implications for Simandou:
Start-up phase: Offshore transshipment → Capesize/Newcastlemax looks most realistic.
Medium term: If the new port consistently handles deep drafts, Newcastlemax should dominate. VLOCs would require very specific berth/draft envelopes, so they’re not the base case initially.
5) Supply side: why this setup is interesting for dry bulk
Orderbook historically lean: Industry snapshots put dry bulk OB ~10–11% of fleet; Capesize ~8–11%, the lowest among bulker classes.
Effective supply < fleet growth: Slower steaming, regulations (EEXI/CII) and dockings trim effective capacity.
Contracting muted: Newbuild appetite has been modest versus other shipping segments.
6) Risks & what to watch
Commissioning & HSE: Rail/port completion, weather, and safe start-up; any slippage to the first-cargo timeline.
Operational phasing: Transshipment efficiency offshore Guinea, port turns and rail reliability will drive realized tons in 2025–27.
Displacement effects: How high-grade Simandou ore displaces/blends with Australia/Brazil flows will shape where ton-miles net out.
Orderbook reaction: A strong rate tape could pull forward new orders; watch Cape OB and yard slots.
Macro/steel: China’s steel demand and scrap/EAF dynamics remain key for iron-ore pull.
7) Equity angle
Several brokers flag valuation upside vs NAV across dry bulk names if 2026+ demand improves while supply stays tight. The case for Capesize-heavy exposure strengthens if Simandou ton-miles arrive broadly on schedule.
8) Companies to watch
Capesize / Newcastlemax heavy exposure (most direct to Simandou ton-miles)
CMB.TECH NV — CMBT (Oslo)
Star Bulk — SBLK (Nasdaq)
2020 Bulkers — 2020.OL (Oslo)
Himalaya Shipping — HSHIP (Oslo/NYSE)
Seanergy Maritime — SHIP (Nasdaq)
Diversified dry bulk (benefit from a tight supply backdrop)
Navios Maritime Partners — NMM (NYSE)
Diana Shipping — DSX (NYSE)
Safe Bulkers — SB (NYSE)
Mid-size specialists (spillover via minor bulks/bauxite & West Africa logistics)
Eagle Bulk — EGLE (NYSE)
Genco Shipping & Trading — GNK (NYSE)
Pacific Basin — 2343.HK (HKEX)
Macro / broad exposure
Breakwave Dry Bulk Shipping ETF — BDRY (NYSE Arca)
Iron-ore flow context (miners): Rio Tinto (RIO LSE/NYSE), Vale (VALE NYSE), BHP (BHP NYSE/BHP.AX ASX)
How it ties to the thesis:
Simandou is primarily a Capesize/Newcastlemax story. If volumes materialize into a thin Cape orderbook and slow effective supply growth, Cape-weighted owners have the most torque. As rates tighten, the effect typically trickles down to diversified and mid-size segments.
9) One-slide summary
Simandou (Guinea) → first cargo ~Nov-2025; ramp to system-wide ~120 Mtpa. Long-haul to China (~11.2k nm) implies big ton-miles comparable to Brazil and ~3× Australia. At nameplate: ~600 Cape/Nmax voyages/year and roughly ~150 ship equivalents of demand. Meanwhile, dry bulk OB ~10–11% (Capesize ~8–11%) and slow steaming keep effective supply tight. If the project delivers, it lands into low net fleet growth—a supportive setup for Capesize rates. Key risks: HSE/timeline, rail/port commissioning, and orderbook response.
Disclaimer
This material is for informational/educational purposes only and is not investment advice or a solicitation to buy/sell any security. Figures may include estimates and are subject to change. Always do your own research and consider your objectives and risk tolerance. I may hold, plan to initiate, or have exited positions in some of the securities mentioned.
