Capesize rate gained on mixed market outlook amid robust iron ore demand and oversupplied vessels market.
The Capesize 5 time charter average gained slightly by $51 day-on-day to $20,434 on Thursday, after a rebound in market from better Pacific market.
Thus, the Baltic Dry Index (BDI) also went up higher by 1.69% day-on-day to 1,500 readings on better Capesize freight rates.
The rush for iron ore shipments to meet China demand
China’s strong iron ore demand had lifted the Pacific market as many Chinese end-users seek for seaborne medium grade cargoes, due to the shortage of medium grade ores among Chinese port inventory.
China had also become a net importer of steel, after reporting a total of 9.9 million tonnes steel imports over Jan-Jul period, up 49.3% year-on-year.
In the meantime, the country’s steel exports for Jan-Jul period was lowered to 32.9 million mt, down 17.6% on yearly basis, based on custom data.
As such, three major miners and operators seek for vessels the Pacific market to move iron ore from west Australia to meet China’s appetite for iron ores.
Thus, the indicative freight heard on the west coast Australia to China route was in the range of $8.50-$8.90/wmt, higher than previous rate at around $8.25/wmt.
However, there was a supply glut of vessels in the Atlantic market due to too many ballasters which lowered the freight rates and depressed market sentiments.
Bunker prices slip over Covid-19 concerns
VLSFO prices dropped by $3/mt day-on-day to $350/mt at the port of Singapore, following market concern over lower oil demand from rising Covid-19 cases.
The lower bunker demand was evident in Spain, where bunker demand dropped to a ten-year low at 473,362 mt in June, down 28% and the lowest monthly volume since 2010.
The market participants were also concerned over Covid resurgences in some part of the world that slow economic recovery and impact oil demand.
As such, the Brent Crude prices slid back toward the $45 per barrel, while WTI crude slipped toward the $41 per barrel after almost a weeklong rally.