Capesize freight rates continued to decline, after Vale reduced its annual guidance for 2021, stroking market concerns over lesser iron ore shipment.
Thus, the Capesize 5 time charter average went down slightly by $10 day-on-day to $12,322 on Wednesday, due to bearish market sentiment.
The Baltic Dry Index (BDI) then also dropped slightly by 0.83% or 10 points to 1,201 readings, due to softening freight rates rates.
Lesser iron ore cargoes from Brazil
The Pacific market still possessed healthy cargo list with mining majors like Rio Tinto, BHP and FM being active in the market to move iron ore to China.
There was also some fresh enquiry to move coal shipments from Russia and Australia to the North Asia, which support freight rates.
However, the gains from the Pacific market were being overshadowed by Brazil’s Vale announcement in revising their annual guidance from previous 310-330 million mt to the lower volumes of 300-305 million mt for 2020.
The lower guidance hit the Atlantic basin hard, as the basin was plagued with long ballast list and the reduced iron ore cargo list is slated to further worsen the support for freight rates from lesser iron ore shipments.
Bunker prices falls on bearish market sentiment
Bunker prices reversed into losses after recent rebound, as the VLSFO fell by $6.50/mt to $376.50/mt at the port of Singapore, following weak crude oil price movement.
This was due to the higher US crude inventories which rose by 4.1 million barrels last week, against market estimate of a draw of 2.4 million barrels.
Meanwhile, market participants are waiting for the outcome of OPEC + meeting this week on whether to extend the production cuts for the new year.