The bad news hasn’t stopped for the Capesize market this year. No sooner had Vale reported its expected losses for the year in the aftermath of Brumadinho then the Australian miners reported on the impacts of Cyclone Veronica on their operations. We sort through the various company reports and our estimates for volumes to get a picture of how things are shaping up.

With the Cape market trading at close to 3 year lows and average TC returns below OPEX levels, it should come as little surprise that there has been a pick up in scrapping in the sector. Year-to-date we have seen 16 Capes and VLOCs sold for demolition, representing 2.94m dwt, already more than was removed in total in 2018. With the demand side struggling, are we going to be reliant on demolitions to keep the market going?

Manganese is critical to the single largest driver of the dry bulk market: steel production. As we see in other metals, Chinese investment is changing the dynamics of production and shipping of what had previously been a pretty stable market.

Six weeks on from the Brumadinho dam collapse, we look at how the freight market has been impacted by the disaster. While the smaller ships march on, the Capes are definitely struggling.

The iron ore market has become so efficient in its supply-chain from miners to steel producers that more than 80% of all seaborne iron ore trade is moved in Capesizes or VLOCs, a share expected to increase over the next few years. The coal market however has been moving in the opposite direction, with the supposedly more efficient Capes losing market share.

While it is the demand side of the market that is currently getting the headlines, things on the supply side continue to quietly develop.  Following last week’s overview of demand and utilisation, we outline our supply side forecasts and expectations.

Our updated forecasts represent a bit of mixed bag. The good news is our assessment of the fundamentals over the rest of the year, and the resultant price forecasts, see the market picking up significantly from where things currently stand, whether in the spot market or against the forward curve. Less positively, we have had to trim our forecast rates from the last set we produced, to account for the deepening impact of the US-China trade war, the slower outlook for the global economy and of course the outcomes of the Brumadinho dam collapse.

The tragic failure of Vale’s tailings dam at Brumadinho has been a key event in what was already a difficult start to the year for the freight market. But the dry market’s problems run deeper.

There is a steady stream of downbeat financial news at the moment as the economic cycles slows and the trade war bites.  But hidden amongst the stories there are a few positive indicators, with the potential to provide some fresh impetus for the freight market

The United States trade war is starting to bite hard, with the media and markets highlighting the big falls in the latest Chinese trade data for both exports and imports. This is worrying news for shipping, although it may strengthen resolve to reach a new U.S.-China trade accord later this month. But less widely reported, beyond the obvious soybean stories, is how Trump’s policies are impacting U.S. dry bulk commodities. Some of the shifts are subtle but there are some notable winners and losers.