Capesize freight rates slumped to end its bullish run, as market concerns turned to mine closures and China’s public holidays.
The Capesize 5 time charter average, then dropped by $610 day-on-day to $74,176 on Thursday, after some selloff in the market.
The Baltic Dry Index (BDI) then dipped by $30, down 0.58% day-on-day, to $5,167, after freight rates dipped from record-high upward momentum.
Slowing market activities for China’s holidays
Market fixing activities lost its stream as Chinese trade participants went for their weeklong public holidays during the Oct 1-7 period.
There were also some market concerns over iron ore supplies as Australia’s FMG suspended its 75 million mt per year mining complex in Solomon hub, Western Australia, after an incident that resulted in a death of a worker.
Nevertheless, the tight tonnage supplies managed to support freight rates, while there was speculation of more thermal coal demand from China, as power plants raced to stock up coals supplies for winter heating purposes, after a bout of periodic power blackouts in Northeast China.
Meanwhile, port congestion persisted in China, with ship delays heard around 14 days being held at some Chinese ports, due to stringent pandemic checks.
Bunker prices recover from previous loss due to firmer demand
The bunker prices rebounded from previous losses, as the price of VLSFO inched up by $1.50/mt to $570.50/mt in the port of Singapore.
The uptick was strengthened by recent oil movement as more oil demand is expected to use for power generations, due to the record-high expensive natural gas prices, as Europe and China secured stocks for winter heating purposes.
Thus, bank such as Citigroup expected oil demand to exceed supply by one million barrels per day (bpd) as Europe switched to fuel oil for power generation instead of natural gas.