Capesize freight rates entered correction phrase despite decent shipping demand and high iron ore prices in the market.
Thus, the Capesize 5 time charter average saw a slight correction of $350 day-on-day to $18,044 on Tuesday, after an aggressive selloff down the forward curve.
The Baltic Dry Index (BDI) then fell by 1.14% or 17 points day-on-day to 1,471 readings from softer Capesize freight rates.
Mixed market for freight rates
Despite the healthy shipping demand in the Pacific, the freight rates followed downward momentum as many of the supporting market news were already factored into the rates.
Such as the port congestion in China and typhoon threat that may disrupt shipping activities in East Asia, as well as fresh iron ore cargoes from Vale’s Teluk Rubiah terminal in Malaysia.
Meanwhile, there was some concerns of the lengthy ballaster list coming back to Brazil, due to lack of fixtures recently.
However, it was heard that major miner, Vale managed to secure several ships for second-half September dates at mid-$17s/wmt level, lower than $18/wmt range seen previously.
Bunker prices fell despite improvement in global demand
VLSFO prices fell by $3.50 day-on-day to $349.50/mt at the port of Singapore, despite overall better global oil demand.
Crude oil demand showed some firmness due to strong manufacturing data from China with PMIs growing at the faster rates in nine years at 53.1 readings in August.
In the meantime, there was a huge drawdown of US oil stockpiles at 6.36 million barrel last week, beating market’s estimate of 2 million barrel draw.