Capesize freight rates managed to book slight gain, despite the shipping market slowed down due to the upcoming holiday season.
The Capesize 5 time charter average inched up slightly by $142 day-on-day to $15,085 on Monday, due to thinner market volumes and rangebound activity.
The Baltic Dry Index (BDI), however dropped slightly by 0.15% or 2 points to 1,323 readings, from the muted shipping activities prior to seasonal holidays.
Market concerns over supply issues in Brazil
Despite the slow shipping activities, the market outlook remained positive, due to bullish steel demand in China that resulted in record-high benchmark iron ore prices above $170/mt level.
Moreover, the price rally was partially due to supply concerns over Brazilian iron ore production, as a landslide incident resulted a seven-day suspension to Vale’s mine in Brumadinho.
Nevertheless, the Atlantic market remained the growth engine, especially for the key Brazil to China route with indicative rate ranging $15-$16/wmt.
Meanwhile, the Pacific market had improved with healthy cargo list with major miners like Rio Tinto and BHP actively seeking vessels for early Jan laycan to move iron ore in the west Australia to China route.
However, the route was not spared from weather related disruption as well, due to the cyclone season in Australia during the Nov-Apr 2021 period.
Bunker prices plunge over concerns of new Covid strain
Bunker prices reversed into losses, due to market fears of new Covid strain that hurt global oil demand once again. Thus, the VLSFO dropped by $8.50/mt to $395/mt at the port of Singapore.
Brent crude oil prices then came under pressure, holding up precariously on $50 per barrel mark, after European countries like UK imposed highest alert lockdown to curb the spread.
Despite the negative outlook, Goldman Sachs remained bullish on the oil market, predicting Brent crude price to average $65 per barrel in 2021, due to mass vaccination and restricted oil output from OPEC+.