Capesize rates spiraled downward due to high tonnage list that resulted weakness in the Pacific market.
As such, the Capesize 5 time charter average dropped further by $1,834 day-on-day to $22,635 on Tuesday, after a steep sell off down the curve during late afternoon session.
Following the decline, the Baltic Dry Index (BDI) slipped by 5.01% day-on-day to 1,594 readings on Tuesday.
Long tonnage list in the Pacific
The long tonnage list had dragged down freight rates operating at the Pacific market with the returns of more vessels after the crew replacements.
There was still some shipping demand in the Pacific as evident of Rio Tinto fixing around three vessels for early August laycan. However, it was hard for the little demand to keep up with the ample ship supply in the market.
Meanwhile, the Atlantic market was sluggish as well with a standoff between owners and charters over freight rates.
Part of the bearish market sentiment was also attributed to Vale’s announcement of reaching the lower end of the 310-330 million mt output guidance for 2020, implying less iron ore shipments for the year.
Bunker prices lift on market optimism
VLSFO prices rebounded from losses and rose by $12/mt to $347/mt at the port of Singapore, upon market optimism over vaccine hopes and restart of European economy.
Market participants were hoping oil demand to return to pre-Covid 19 levels soon with trial of experimental coronavirus vaccines entering Phrase 3 or large-scale testing on humans, the final step before regulatory approval.
In the meantime, the European Union introduced a EUR 750 billion stimulus fund to kickstart its coronavirus-hit economy.