Iron ore shipments from Western Australia were still restarting at the aftermath of Cyclone Veronica, while Brazil miner, Vale jousted against stricter state environmental regulations in restarting some of its mining operation after the fatal dam collapse in Brumadinho.
In the meantime, Cyclone Wallace is forming in northern Australia and may head down to iron ore producing region of Pilbara to further disrupt shipments and supplies in near term.
New VAT fails to spur China’s imports
Chinese traders and end-users wanted fresh cargoes from Australia’s Dampier and Hedland to take advantage of the reduction of new VAT that lowered import costs.
However, their requests were denied by the disruption caused by cyclone Veronica. For instance, BHP claimed a loss of 6-8m mt of iron ore production and expected to resume full operating capacity in late April.
Other Pilbara major miners were estimated to reduce their total iron ore export by 51% % week-on-week to 8.23m mt at the aftermath of the cyclone.
Overall, BMO Capital Market (BMO) placed a total reduction of 20m mt of iron ore exports from Rio Tinto, BHP and FMG after cyclone Veronica. According to some trade sources, the tight supply of Pilbara will only be expected to ease around mid-April 2019.
Colombian cargoes to the rescue
Despite the lack of cargoes from Australia and Brazil, the Capesize paper market experienced a late afternoon rally on Wednesday, 3 April 2019.
Apparently, the buying spree was attributed to the fronthaul cargoes from Colombia which saw the Apr contracts to push up to the $5,700 level, followed by Q2 to $7,700 and Q3 to the $12,750 level.
As such, the Capesize 5 time charter average recorded at $3,540 on Wednesday, up $80 day-on-day but down $155 from Monday’s rate of $3,695.
Progressive gains for Panamaxes, while slip-ups for smaller vessels
It was a sluggish start for Panamax paper market before booking gains later in the week. A flurry of buying activities was seen on Tuesday, 2 April 2019, that pushed the Q2 and Q3 contracts up to $9,500 and $10,400 highs respectively.
However, the paper market remained rangebound on Wednesday, with a better Atlantic market being offset by a weak Pacific market. Thus, the Panamax time charter average recorded at $9,009, up $57 day-on-day.
Supramax paper market came under selling pressure throughout the week and saw the Supramax time charter average to drop by $218 day-on-day to $8,682 on Wednesday, while Handysize time charter average fell by $101 day-on-day to $6,652.
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