Capesize freight rates continued to decline on bearish market sentiments upon market uncertainty over demand.
The Capesize 5 time charter average, then slid by $4,995 day-on-day to $74,540 on Wednesday, following an extended selloff session.
The Baltic Dry Index (BDI) also dropped by $172, down 3.20% day-on-day, to $5,206, due to weakening freight rates.
Freight rates move into backwardation
Freight rates were shrouded by market uncertainty over typhoon in southern China, the persisted port congestion and fire incident in Vanino, Russian Far Eastern coal port.
These factors threatened shipping demand for moving iron ore and coals in resulting more delays for shipments due to longer time needed in unloading cargoes at port terminals.
Thus, the Atlantic market turned into a noticeable backwardation, with shipping demand focused on key route of Brazil to China, as Vale fixed some vessels to move iron ore cargoes by mid-October.
Meanwhile, the Pacific market experienced declining freight rates, though there were more enquiries to move coals from eastern Australia.
Bunker prices benefit from rising crude prices
The bunker prices gained slightly on higher crude prices, as the price of VLSFO inched up by $0.50/mt to $608.50/mt in the port of Singapore.
Some market participants expected crude prices to hike higher amid the global energy crunch caused record-high coal and natural gas prices.
As the more expensive coal and natural gas prices would cause end-users to seek alternative like fuel oil and diesel for power generation, boosting oil demand and crude prices in near term.