Capesize freight rates continued to spiral downward, despite a move up supported by the improving physical market.
The Capesize 5 time charter average, then fell by $434 day-on-day to $28,694 on Thursday, after a choppy trading session.
The Baltic Dry Index (BDI) then dropped by 2.10% day-on-day, down 66 points to 3,073 readings, due to the weakening freight rates.
Capesize freight rate to find a floor
The physical market had improved with some decent volume of tenders, which led some trade participants to believe that market to rebound soon.
The Pacific market continued to be supported by consistent shipping demands from Japanese and South Korean tenders as well as healthy cargo list from west Australia.
However, there was some resistance from the shipowners and most owners preferred to keep their vessels in the Pacific basin rather than ballasting them westward.
Meanwhile, the Atlantic market was generally muted, though it was heard that Brazil’s Vale had fixed a few COA cargoes for August to November laycans.
Bunker prices slide on supply glut
The bunker prices declined over supply glut fear, as the price of VLSFO dropped by $7.50/mt on-day to $550.50/mt in the port of Singapore.
Market participants were concerned of an oversupplied crude market, after OPEC reached a compromise among key members of Saudi Arabia with UAE to ramp up production.
Under the agreement, UAE is expected to lift its baseline production level to 3.65 million barrels per day (bpd) from the previous 3.17 million bpd level.
In the meantime, the Energy Information Administration (EIA) reported a buildup of gasoline stocks by 1 million bpd for the week ended on Jul 9, which raised concerns upon growing supply glut.