Capesize freight rates plunged after a selloff as market sentiment turned bearish with few fixtures done at lower rates.
Thus, the Capesize 5 time charter average fell by RMB 1,402 day-on-day to $13,379 on Wednesday, as the 5TC index lost around 10% at one point before much stabilization later.
The Baltic Dry Index (BDI) then followed the declining freight rates and dived down by 4.92% or 59 points to 1,141 readings.
No last quarter rally for shipments
The selling pressure on the paper market reflected the market doubts on whether there will be a last quarter rally for the miners to raise shipments in fulfilling their annual guidance.
Moreover, China’s informal ban on the Australian coal imports had resulted in lesser coal shipping activities for the upcoming winter heating season.
Nevertheless, it was heard that there were some coal shipments arranged for the east Australia to South Korea route on Capesize vessels.
Other than that, most of the shipments comprised of moving iron ore cargoes to China, as Rio Tinto was heard to fix a vessel for the west Australia to China route done low at around mid-$6/wmt for end-November laycan.
Meanwhile, the Atlantic market was oversupplied with a long ballaster list, despite Vale fixing a handful of vessels for end-November and early December laycan done at the range of $13-14/wmt.
Freight rates receive no support from higher bunker prices
VLSFO prices continued to rally with gains of $12.50/mt to $368.50/mt in the port of Singapore, due to better crude oil movement.
Despite the rally, the bunker failed to lift weakening freight rates from low shipping demand, while the crude oil market received positive support from the news of Covid vaccines.
Moreover, the drawdown of the US inventories also lifted market sentiment further with American Petroleum Institute recording draws of over 5 million barrels each for crude and distillate stocks respectively.