Capesize gains despite coronavirus concerns

Capesize market continued to loom by coronavirus spread toward major iron ore exporting ports in Brazil, South Africa and Australia.

Despite the concerns, the Capesize paper market gained by $707 on-day to $3,507 on Wednesday, due to sudden spike in rates in Apr, Q2 and Q3 contracts on the trading day before dropping sharply toward the last 30 minutes.

 

Port and mine closures over coronavirus

Brazil’s Vale had suspended iron ore blending facility at Teluk Rubiah, Malaysia till Mar 31, due to a national’s lockdown to curb the spread of coronavirus.

According to Vale, the suspension of Teluk Rubiah iron ore transshipment center will result a loss of 800,000 mt of shipment during the first quarter.

Similarly, Shougang Peru had also shut down its iron mine to limit the spread of coronavirus outbreak.

However, the impact on Capesize market is expected to be limited but market participants were concerned about further lockdowns in other coronavirus-hit countries that might mess up shipping operations.


Miserable Atlantic market and healthy Pacific market

Freight rates continued to head south in Atlantic market due to sparse shipping activities, where ships were heard to be waiting at Brazil for almost two months.

The closure of Brazil’s Santos port might set the tone for low freight rates and some prompt ships heard offering below $10/wmt.

Meanwhile, the Pacific market saw much healthy cargo volumes as mining majors continued to seek for ships to move iron ore for the Australia to China route.

There were talks about Rio Tinto fixing three ships from Dampier to Qingdao route for early April laycans at $4.40- $4.45/wmt levels.

 

Oil prices to average $20/bbl in Q2

VLSFO prices fell for the consecutive third day by $22 on-day to $281.50 at the port of Singapore, following the decline in crude oil prices.

Brent crude price slumped below $30 per barrel barrier level to $26.50 per barrel, an 18-year low, while WTI crude dropped to $23 per barrel level.

Due to supply glut, Goldman Sachs revised its oil forecast for the second quarter, and forecast both the WTI and Brent averaging $20 per barrel.