It was another ugly day for the Capesize market as rates continued to deteriorate from oversupply of vessels and low shipping demand.
The Capesize 5 time charter average plunged further by $949 on-day to $2,893 on Tuesday, due to sell off on the paper market.
With the massive sell off, the market sentiment has become very bearish and there market talk that the depressed rate might last for a few months ahead.
Too many ballasters for the Brazil to China route
There were simply too many ballasters for the key Brazil to China route to support freight rates, according to trade sources.
Despite the fact, that many trade participants expected Brazilian iron ore exports to improve from Q2 onwards after the rainy season that disrupted output and shipments previously.
Mining major, Vale was heard to be seeking vessels for second half June laycans, despite the escalating coronavirus situation in Brazil.
Meanwhile, a trading house was heard to fix at least two Capesize vessels for the Brazil to China route at the range of $7.50-$7.90/wmt for end-May and early June laycan.
Long road of recovery for oil demand
VLSFO bunker prices plunged by $7 to $250 per tonne at the port of Singapore after a strong rebound seen earlier in week.
Brent crude prices had slumped back to the $29 per barrel, while the WTI was rangebound at mid-$25 per barrel, amid bearish market sentiment.
For instance, oil major, Shell did not think that a recovery of oil prices are likely this year and even in the next year due to the effects of COVID 19.
IHS Markit, even predicted to oil demand to return much later, by the end of 2021, at around 96-98% of pre-coronavirus levels.