Capesize market made a slow start after a long weekend break, with sluggish shipping demand in physical and paper markets.
Thus, the Capesize 5 time charter average dipped slightly by $20 to $4,120 on spot rates, almost a flat index that failed to inspire the paper market.
The almost unchanged index may reflect market concerns over market fundamentals, especially on the shipping demand out of Brazil amid higher coronavirus cases in the country.
Long road to recovery for steel demand
Market participants are expecting a slow steel demand in June, as most of the European and Japanese steel mills had reduced their output, while industrial activities were slowly picking up after lockdown relaxation measures.
China’s steel demand is also expected to dip in June, as rainy season may dampen steel demand in southern China.
Indian demand also remained in doubts in coming months as iron ore production took a plunge of 47% year-on-year in April, due to nationwide lockdown measures to contain the virus.
Decent cargo list in the Pacific market
Shipping demand in the Pacific market continued to support the freight rates amid bearish market sentiments.
There were no significant changes to freight levels, as mining majors were heard to fix at least three vessels for the key west Australia to China route.
Thus, the indicative freight heard on the west coast Australia to Qingdao route was in the $4.50/wmt to $4.60/wmt range.
Oil market rebalancing in July?
The higher bunker prices continued to support freight rates as VLSFO prices hiked up by $10.50 on-day to $290/mt at the port of Singapore.
The firm bunker prices were supported by higher crude oil prices, as Brent crude prices hovered at the range of $35- $36 per barrel level, while the WTI also stabilized around $34 per barrel.
The uptick in oil prices may be due to market reaction to Russian oil minister’s comment of oil market rebalancing by July, as more oil producers tried to comply with OPEC + output cut to support prices.