The commodity market entered the fourth quarter on a high note, with Brazil's to China ocean freight rate rising this year as demand for iron ore from China continues to grow.

Despite the ongoing holidays in China and most of North Asia, the commodities market has extended its steady operation on many of the active iron ore routes alongside Brazilian ocean freight.

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Sea freight on the rise due to China's iron ore imports from Brazil

China's iron ore imports from Brazil rose 15% month-on-month to 23,5 million tonnes in August, the latest data from the General Administration of Customs showed. This is the largest volume of Brazilian iron ore imported by China so far in 2020, the data shows.

China normally sees the peak of iron ore imports from Brazil in the second half of the year. Increased imports have helped to increase demand per ton-mile on commodity ships.

Tonne-mile demand is calculated by multiplying the volume moved in metric tons by the distance traveled in miles with ocean freight. Covering a greater distance implies less availability of ships, even if the total size of the fleet remains the same or, on the contrary, compensates for the increase in tonnage supply.

Upbeat short-term outlook

“So far, the market is still promising, and the fourth quarter performance of commodities mainly depends on sea freight demand from Brazil,” says a charter source with a Chinese steelmaker.

Vale mining company has not yet commented on the change in iron ore transport

Meanwhile, Brazilian miner Vale has not announced any changes to its iron ore production guidance for 2020, which is in the range of 310m to 330mt, despite the stoppage of operations at its Viga concentration plant on 24 September, which impacts 11.000 mt / day of iron ore fines production.

Vale would need to export at least 107m tonnes in Q2020 to meet its XNUMX target. As such, market participants expect Brazil's current market to be busier in QXNUMX than QXNUMX.