Capesize market came under pressure again amid bearish market sentiment for June.
Thus, the Capesize 5 time charter average went below $4,000 level again, after a drop of $334 to $3,786 on Wednesday.
The volatile bunker market did not help to support the freight rates and thus the Baltic Dry Index went downhill by 0.79% to 502 readings on mid-week.
Ship oversupply in June
The bearish market sentiment was due to supply of too many vessels for mid-June windows.
As such, there was a sizable number of tonnages especially on the key Brazil-China route, where the ballaster lists are only expected to thin out toward the end of June.
The key route of west Australia to China did not fare better despite the fixtures of around five vessels among mining majors like Rio Tinto and BHP.
However, the rates were done at lower ends and mining major, FMG, apparently was absent in the market for moving iron ore at the west Australia to China route.
Thus, the freight indications on the key west coast Australia-Qingdao route were heard to done around the $4.25-$4.40/wmt range.
Bunker rally is losing ground to weak global demand
The bunker rally started to lose steam as VLSFO prices slid down by $3 day-on-day to $287/mt at the port of Singapore.
The decline in bunker prices followed the crude oil prices movement, where Brent crude prices dropped toward $34 per barrel level, while the WTI also slid toward $32 per barrel.
This was due to a sharp drop in oil demand, as global oil demand plunged to a recent low of 70 million b/d as compared to over 100 million b/d in pre-coronavirus period.
Despite the gloomy demand, Morgan Stanley expected oil demand to rebound to around 97 million b/d by Q4, as global economics would recover from lockdowns by then.