Capesize freight rates took a correction after recent rally as trade participants waited for clearer market directions.
The Capesize 5 time charter average dropped by $278 day-on-day to $15,664 on Wednesday, due to a slip in the physical market.
The Baltic Dry Index (BDI) then dipped slightly by 0.62% or 8 points day-on-day to 1,281 readings amid the correction phrase.
Mixed shipping outlook
The dip in freight rates was partly due to the sharp correction of iron ore prices then fell from the $130/mt level toward the $125/mt and lower.
This led some market participants to question if the iron ore demand had peaked and came to a slowdown.
Despite the doubts, the cargo list remained healthy in the Pacific market, as the major miners were still active in seeking vessels for end-September and early October laycans.
In contrast, the Atlantic market was rather quiet with limited shipping activity. However, some trade participants expected an uptick of freight rates over the near term due to the thinner ballaster list.
VLSFO jumps on crude oil rally
VLSFO prices jumped up by $14.50 day-on-day to $330/mt in the port of Singapore, following better crude oil price movements.
The crude oil rally was due to supply disruption caused by Hurricane Sally, which reduced around 500,000 barrels per day of offshore production at the Gulf of Mexico.
Moreover, market sentiment was lifted by EIA’s stock draw of 4.4 million barrels to 496 million barrels last week, as it beat previous market expectation on a rise of 1.3 million barrel.
However, the rise in bunker prices did not support the freight rates as market participants held their concerns on slowing steel demand.