Sluggish Pacific and Atlantic had dragged down Capesize rates and reversed much of the gains that occurred in previous week.
By Thursday, the Capesize 5 time charter average went down further by $558 to $3,228, despite more buyers entry at the afternoon session in trying to lift the market.
Given the volatile Capesize rates and bearish market sentiment, the Baltic Dry Index (BDI) continued to fall short of the 500 readings and recorded 489 on Thursday, down 2.59% day-on-day.
Long ballaster tonnage list in Brazil to China route
The weakness in the freight rates got to do with the long ballaster tonnage list on the key Brazil to China route.
Besides, market participants were worried over rising coronavirus cases in Brazil, which might call for stricter lockdown measures that affected iron ore output and logistics in order to flatten the curve.
Due to the long tonnage list, mining major, Vale had revised its idea for June 15 onwards laycans, while some industry players advised that mid-$8s/wmt levels could be seen for mid-June dates and high $8s/wmt levels for end-June dates.
Plunging bunker prices fail to support freight rates
The falling bunker prices did not stop the bleeding of freight rates as the VLSFO prices slumped by $14 day-on-day to $273/mt at the port of Singapore.
This was in line to falling crude prices, as Brent crude prices dropped lower toward $34 per barrel level, while the WTI hovered around $32 per barrel.
The slump in crude prices continued even though Saudi Arabia and other members of OPEC were proposing output cut extension till the end of 2020.
The proposal asked for a deeper 9.7-million-bpd cut extended through the end of 2020 to rebalance the market with other oil producing country such as Russia.