Capesize freight rates continued to slip on long tonnage list with bunker prices cooling off, while Panamax rates rose on better market sentiment with US-China Phrase One agreement.
Thus, Capesize spot prices were yet to recover above $10,000 level, with the Capesize 5 time charter average at $9,011 on Wednesday, down $244 on-day.
In the meantime, Panamax spot prices gained much support during the week and gained $523 on-day to $6,086 for Panamax time charter average on Wednesday.
Oversupply of vessels before Spring festival
Due to long tonnage list, Capesize rates suffered losses for both Atlantic and Pacific basins in midweek before Spring festival.
Bunker prices started to cool off that prompted less support for freight rates, though barges availabilities were limited.
According to trade sources, the scrubber-fitted ships got advantages on long trips over non-scrubber fitted ships due to the high bunker spread between low sulfur fuel oil (LSFO) and high sulfur fuel oil (HSFO).
Phrase One deal with China buying $200 billion of US exports
The signing of US-China Phrase One trade deal on Wednesday, 15 Jan 2020, has improved market sentiment with China pledging to purchase additional $200 billion of US exports.
Among the exports, China will import $32.9 billion of US manufactured goods, $18.5 billion of energy goods, then $12.8 billion of services and $12.5 billion of agricultural goods in 2020.
Most of market participants viewed the trade deal positively, and Panamax market saw some improvement on freight rates first as compared to other dry bulk vessels.
Strong iron ore demand to support freight
Going forward, the strong iron ore market might support the freight market as it was heard that miners were seeking vessels to move iron ore and coal for end-January and first half February laycans on Wednesday.
Meanwhile, the rainy season in South America continued to lower iron ore volumes which supported high iron ore prices and might lift the freight rate for key Brazil to China route.