As we discussed in Commodore Research's June 23rd Weekly Executive Report, overall dry bulk rates fell last week with capesize rates in particular coming under significant pressure. Brazilian spot iron ore cargo volume climbed even further last week, which helped propel capesize rates even higher during the first half the week. Last week’s 9 officially announced Brazilian spot iron ore cargoes again marked the largest amount reported all year. However, these vital capesize fixtures were primarily done during the first half of the week. Capesize rates peaked last week at $30,944/day and ended up coming under significant pressure during the second half of the week. Brazilian spot iron ore cargo volume has been falling further, and capesize rates have continued to drop.
Overall, we continue to stress that we remain bullish for China’s iron ore import prospects, and we remain of our long-held view that iron ore prices just have to stay high enough that global iron ore miners will continue to keep pumping out production (if the miners produce, China will continue to buy). At the same time, though, we remain bearish for China’s coal import prospects as China’s coal-derived electricity generation growth has now fared worse than coal production growth for eight straight months. We remain concerned at how the dry bulk market will fare in a sustained environment with coal imports in contraction.