Capesize freight rates slumped into losses after aggressive selloff in the paper market, especially for the Oct and Q4 contracts.
Thus, the Capesize 5 time charter average fell by $1,431 day-on-day to $33,465 on Wednesday, after the physical market came under pressure.
The Baltic Dry Index (BDI) followed by the slump but still managed to stay above the 2,000 readings with drop of 2.53% or 53 points day-on-day to 2,044.
More freight corrections ahead?
The wild backwardation on the paper market had dampened ship-owners’ confidence for forward laycan windows, implying a not so favorable November month for forward freight agreement market.
Apparently, the market had cooled off after the recent shipping rally and some trade sources expected more corrections ahead, though there were still plenty of cargoes for fixtures.
For instance, there was still healthy shipping demand in the Pacific market with major miners like Rio Tinto and FMG active in the market.
In the meantime, it was more sluggish in the Atlantic market as Brazilian miners continued to seek for Panamax ships instead of Capesize vessels for cost effectiveness.
It was heard that some Brazilian miners managed to fix a few Post-Panamax ships for moving iron ore from Tubarao to Qingdao for October laycan.
VLSFO prices hike on better oil demand outlook
VLSFO prices increased by $4/mt day-on-day to $342.50/mt at the port of Singapore, following upward movement of crude oil prices.
Some upticks were seen in crude oil prices after the Energy Information Administration (EIA) reported a crude oil inventory build of 500,00 barrels for the week ended on Oct 2.
Despite the build, there was huge decline in gasoline and distillates stock that indicated that oil demand returning gradually.
During the week, the gasoline inventory reported an inventory decline of 1.4 million barrels despite higher average gasoline production at 9.5 million bpd as compared to output of 8.9 million bpd in previous week.
Meanwhile, the distillates stocks continued to fall at a draw of 1 million barrels for the week, albeit at a slower rate as compared to decline of 3.2 million barrels reported in previous week.