Owners are keeping their capesize bulkers in the Pacific basin while the Covid-19 pandemic wreaks havoc on Brazil's iron ore supply.

The major exporter has surpassed the US as the virus epicenter as cases there approach 450,000 and deaths close in on 27,000 as of Friday.

The commodity's output has, therefore, slowed from the country's mining provinces, forcing China to turn to Australia and elsewhere for needed iron ore.

"The iron ore trading dynamics remained robust amid strong Chinese demand, but market players are obviously concerned about Brazilian iron ore capacity with the apparent acceleration of the Covid-19 situation which could potentially impact mining and export activity," Clarksons Platou Securities managing director of research Frode Morkedal wrote on Friday in a client note.

"As a result, owners preferred to keep ships in the Pacific basin putting pressure on the freight levels there.

"For the other segments of dry bulk tonnage, market orders continued to increase enough to support somewhat higher freight rates."

Online ship tracker VesselsValue shows a vast majority of the 270 capesizes and Valemaxes positioned in the Pacific basin — particularly in the Yellow and China seas.

Most of these vessels in the Atlantic basin are headed toward China, some laden, some not.

Rates are also showing capesize owners' preference for the Pacific region.

The average time-charter rate for the China-Japan transpacific roundtrip voyage gained $285 to $4,581 per day, according to Baltic Exchange assessments.

Meanwhile, the same rate for the benchmark China-Brazil leg improved only $73 to $3,173 per day.

Bring on the weekend

Capesize rates remained low all week long as the pandemic continues to cast a dark cloud over all of shipping.

"A sober end to the week, with the market seemingly ready for the weekend," the exchange said in its weekly dry bulk shipping market wrap-up report.

"After a steady week of rate declines a small flurry of Atlantic business – combined with a little activity in the Pacific – managed to end the week up a tick."

The weighted time-charter equivalent average for capesizes fell to $3,369 per day on Friday from $4,120 per day on Monday, according to exchange assessments.

"While most global routes — both on time charter and voyage — varied little from opening levels at the beginning of the week, the Pacific Round C10 looks to have fared the worst, dropping from $6,563 to close the week at $4,581," the report said.

"The Pacific C5 West Australia to China route settled the week at $4,123 — which equates to a little less than $3,000 per day in earnings for a capesize vessel — and leaves the market still trading well below operating cost levels."