Capesize rates came under correction again, perhaps fulfilling market expectation of a week for correction due to shipping supply glut.
The Capesize 5 time charter average then fell further by $1,175 day-on-day to $24,387 by mid-July, 15 July 2020, despite an influx buyers entered at the afternoon session.
Following the decline, the Baltic Dry Index (BDI) dropped by 2.64% on-day to 1,696 readings on Wednesday.
Too much shipping supply
The decline in the paper market followed the supply glut of vessels in the Pacific market, while there was a lack of shipping demand for the basin.
The iron ore miners were still seeking for vessels to move iron ore cargoes. However, the coal demand had virtually become non-existent in the Pacific, and market participants worried if iron ore is enough to sustain the freight market.
The Atlantic market offered some hope to the market, as more fixtures were heard to ship iron ore out of Brazil for August and September loading dates.
More Atlantic shipping activities then managed to attract more buyers to return to the paper market at the afternoon session, but they failed to gain any tractions to turn the market around.
Bunker prices rebound from correction
VLSFO prices rebounded from previous losses and inched up by $3/mt to $337/mt at the port of Singapore in a choppy market.
The uptick may follow the rising crude oil movement due to huge drawdown of the US crude oil inventories.
According to Energy Information Administration (EIA), the US crude oil inventories had shed 7.5 million barrels for the week ended on July 10, after a buildup of 5.7 million barrels last week.
The drawdown indicated a gradual recovery of US economy that increased oil consumption, but the US crude oil stockpiles are still 17% above the five-year average for the season.