Capesize freight rates dipped despite some improvement in the supply glut and better market expectation for Q4 shipping demand.
Thus, the Capesize 5 time charter average dropped by $407 day-on-day to $15,075 on Thursday, due to slow market.
The Baltic Dry Index (BDI) then fell by 2.08% or 27 points day-on-day to 1,269 readings on softening freight rates.
Market optimism for Q4
Many trade participants expected better shipping demand to return in Q4, as Chinese import quotas is likely to be renewed for more seaborne coking coal purchases.
Moreover, more blast furnaces are resuming operation like the Japanese and South Korean mills that may boost raw material imports like coals and iron ores.
However, there is a lengthy tonnage list in the Atlantic market currently, which lowered shipping freight rates, while the decent shipping demand in Pacific market was not robust enough to lift freight rates further upward.
No support from soft bunker prices
The VLSFO prices managed to inch up by $1/mt day-on-day to $314/mt in the port of Singapore, despite falling oil demand.
The surprised build-up in US oil stockpile resulted a slump in crude oil prices that saw the Brent Crude oil prices dropped under $40 per barrel, while the WTI Crude dipped toward the $37 per barrel.
According to the Energy Information Administration (EIA), the US crude inventories rose 2-million-barrel last week against market expectation of 1.3 million barrel draw.
In the meantime, bunker demand also took a hit as Turkish bunker demand dropped by 12% year-on-year to 1.1 million mt for H1 2020. Thus, some market experts expect the Turkish bunker demand needs around 2-3 years time to recover back to its pre-Covid 19 level.