Capesize freight rates reversed into losses after recent gains, due to mixed market directions in both basins.
The Capesize 5 time charter average went down by $840 day-on-day to $11,766 on Monday, due to softening freight rates.
The Baltic Dry Index (BDI) then dropped by 2.92% or 35 points to 1,162 readings, due to the standoffish Atlantic market as compared to the Pacific.
More corrections ahead
It was a slow start for the week, as freight rates seemed to cool off in the Pacific market as the round trips were in backwardation, while early shipments were still attracting a premium.
Thus, some trade participants expected further correction of freight rates in the Pacific market for the week, even though the Australian miners were pushing for more iron ore shipments to China, amid record-breaking iron ore prices at over $145/mt.
Meanwhile, the Atlantic market continued its downward spiral with lesser iron ore shipping demand from reduced annual guidance from Vale, while the lengthy ballaster list also depressed freight rates further.
Less support from bunker prices
The falling bunker prices did not support the slump in freight rates either, as the VLSFO plunged by $10.50/mt to $384.50/mt at the port of Singapore.
The market optimism over oil demand came to a halt over concerns of escalating US and China tension that dented market confidence.
Furthermore, the crude oil prices slumped upon news of Iran’s preparation to produce and sell crude oil at full capacity within three months. Apparently, Iran believed that the US would lift its trade sanction on Iranian oil exports under the upcoming Biden administration.