Capesize bulker rates slid on Wednesday as concerns over China possibly cutting steel output sent jitters throughout the market.
The Baltic Exchange’s Capesize 5TC of spot-rate averages across five key routes declined 6.9% on Wednesday to $14,528 per day to fall below $15,000 per day for the first time in almost two weeks.
The average spot rate for the C14 benchmark round-trip iron-ore route from Brazil to China fell the most of all rates for key ore routes on Wednesday, dropping 13% to $13,280 per day.
Australian iron ore giant Rio Tinto fixed an unnamed capesize on Wednesday to carry 170,000 tonnes of iron ore at $8.50 per tonne after loading the ship from 6 to 8 April.
On Tuesday, the miner hired two unnamed capesizes to carry the same amounts of the commodity at $8.80 and $8.90 per tonne on the same route after loading the vessels from 4 to 6 April.
“The iron ore market has been slightly impacted by market speculation that China may enforce a reduction in steel production to combat air pollution,” Clarksons Securities analyst Frode Morkedal wrote in a note on Wednesday.
“Some officials think this cut may impair the Chinese economy’s recovery and a final decision is expected by June.
“Given the fairly substantial upswing to the Chinese economy, we doubt actual cuts will be this large.”
China may cut crude steel output by about 2.5% this year as it extends a two-year-old policy to curb emissions, Reuters has reported.
Morkedal also noted that Australia’s year-to-date ore exports grew 10% last week, while Brazil’s exports dropped 30%.
The futures market still held optimism for the capesize sector, as April contracts picked up $753 per day on Wednesday to reach $17,596 per day, while May contracts added $575 per day to come in at $20,075 per day.
