Capesize freight rates inched higher, despite correction in the paper market and cooling off in the physical market.
The Capesize 5 time charter average then rose slightly by $68 day-on-day to $26,489 on Wednesday, despite a selloff in the paper market.
The Baltic Dry Index (BDI) managed to rise slightly by 0.38% or 7 points to 1,856 readings amid softening Capesize market.
Slowdown in physical demand
The weakening freight rates were attributed to cooling down of physical trading, where there was a standoff between owners and charterers.
For the Pacific market, there was still healthy cargo demand, but spot Pacific round trips were done at lower freight levels.
Some trade participants also expected more vessels to return to the market to ease the tight vessels supply, while other market participants predicted the bad weather off China may keep tonnage tight in the region.
Meanwhile, there was thin shipping activity in the Atlantic after the recent flurry of fixtures, as trade participants prefer to wait for clearer market directions before securing shipments.
Firm bunker prices continue to support freight rates
Despite much uncertainty in the Capesize market, the firm bunker prices continued to support freight rates, as the price of VLSFO rose by $2/mt to $453/mt at the port of Singapore.
The slight price upticks reflected market concerns over rising coronavirus cases in China, namely Hebei province, which is the main steel-making hub of the country.
Market feared that the restrictive truck transportation measures, may affect steel production and reduce iron ore imports to the province.
Meanwhile, there was also concern over declining oil demand in Europe, as various government imposed stricter and longer lockdowns measures to stop the spread of coronavirus.