Despite expectations of a correction and worries over the supply of Brazilian iron ore cargoes, spot rates for capesize bulkers have risen consistently all week.

Firm demand for iron ore from Chinese steel mills has helped maintain this growth since Monday.

An increase in freight rates was seen across all the Baltic Exchange's benchmark routes every day this week.

The Baltic Capesize Index, a key marker of sentiment, has increased by 88% since Monday and finished the week at 1,523 points.

Earnings for capesizes on the Baltic's five major capesize routes (5TC) have increased by 60% since Monday.

The 5TC benchmark was assessed at $12,410 per day on Friday, having risen by a massive $1,734, which is the largest overnight leap in the assessment since late November.

Demand from China

Chinese steel mills are producing steel at a level 4.4% higher than at this point last year and at the second highest level on record, according to data from the China Iron and Steel Association (CISA) this week.

The mills produced an average of 2.0925m tonnes per day of crude steel during the last week of May, not far behind the record level of 2.1049m tonnes per day in mid-September 2019, according to the data from CISA, which includes more than 100 of the country's largest steelmakers.

High profit margins have reportedly allowed steel mills in China to run at near full capacity for the past two months, which has run down the country's iron ore inventories.

Chinese demand for the commodity is reflected in the week's capesize fixtures too.

Of the 26 capesize fixtures for iron ore voyages reported between Monday and Friday, 24 were bound for China.

Many of these deals were for cargoes from Western Australia, but a number of ex-Brazil fixtures were seen from Wednesday onwards.

Friday even saw fixtures for cargoes from northern Norway and South Africa bound for Qingdao, China.

An unnamed Swissmarine capesize was fixed to mining giant Anglo American for an iron ore voyage from Narvik to Qingdao at $18.65 per tonne, loading from 24 August.

Major bulker operator Oldendorff was reported to have fixed Ocean Freighters' 177,000-dwt Pontotriton (built 2007) to carry ore between Saldanha Bay to China at $11.05 per tonne, loading from 3 July.

Benchmark breakdown

The Baltic Exchange's daily market report had hinted on Thursday that fixing activity was slowing and "that offers had been backing off or [were] non-existent on many routes" — but on Friday this appeared not to be the case.

All the Baltic's benchmark routes for capesizes showed firm increases in rates on Friday, with round-trips from Europe to China (C9) increasing by almost $3,000 overnight.

Rates on the C9 round-voyage route were assessed at $24,725 per day, up by $2,900 since Thursday.

In the East, the trans-Pacific round voyage from China/Japan was assessed $2,005 higher than Thursday at $14,313 daily.

The steep gain in rates on the Brazil to China benchmark for iron ore continued on Friday, when the route rose by $0.88 to $14.91 per tonne.

Rates on the run have increased by 31% since Monday.

Rates on the other key iron ore benchmark, Western Australia to China, were assessed $0.386 higher at $6.486 per tonne, which is close to 15% above Monday's level.

The Baltic's backhaul benchmark has finally returned to positive territory on Friday, rising by $885 to be assessed at $760 per day.

The route has been at sub-zero levels since 7 January and was a big contributor to the Baltic Capesize Index floundering at negative levels earlier this year for the first time ever.

Although it is not unusual for the backhaul route to be assessed at negative levels, the route was assessed at all-time low levels between 21 January and early April, bottoming out on 2 March at the unprecedented level of -$12,898 daily.

Friday's reported fixtures also saw a rare period deal.

Danish bulker operator Norden has reportedly booked Transocean Maritime's 81,600-dwt kamsarmax Alcor (built 2015) for seven to ten months at a daily rate of $10,000.

The vessel will deliver at Shanghai, China on 18 or 19 June, redelivering worldwide.