Vale has delivered more bad news for the capesize market at a time Cyclone Veronica is set to whip up some short-term headwinds off Australia.
While word of the pending return of the 30mt Brucutu mine in Brazil boosted Golden Ocean shares and the FFA market yesterday, the positivity has now received a setback.
Due to inconclusive results from a stress test, Vale decided to suspend operations at the Alegria mine in the Mariana complex, which is bad news for freight markets, said DNB Markets.
Joakim Hannisdahl, an analyst at Cleaves Securities, said: “There is not a dull moment in dry bulk shipping at the moment, with investors seemingly jumping for joy or scrambling for cover on a day-to-day basis.”
Nicolay Dyvik of DNB Markets said the sensitivity to news from Vale following a dam disaster earlier this year was displayed yesterday in Golden Ocean’s share price rise and improving futures markets.
In a report this morning, he suggested Golden Ocean stock would trade down on the latest setback. This rang true with the shares down 2.29% in Oslo at the time of writing.
Adding further drama to the dry bulk picture is a developing storm off Australia.
Hannisdahl said Cyclone Veronica is expected to reach category five tomorrow and hit the key Australian iron ore export hubs in Port Hedland, Dampier and Cape Lambert on Sunday
“These three ports in conjunction with mining operations in the Pilbara region constitutes around 57% of total seaborne iron ore volumes, and around 48% of all capesize cargoes,” the analyst said.
“We expect the impact to be highly disruptive to capesize vessels in the area, but to be short-lived.”
