Capesize rates came under pressure and took a correction with losses on both the Pacific and Atlantic basins.
The Capesize 5 time charter average dropped by massive $3,301 day-on-day to $29,610 on Wednesday, with a large chunk of the recent gains wiped out in a single session.
Following the plunge, the Baltic Dry Index (BDI) dived by 5.13% day-on-day to 1,849 readings, putting an end to rally since mid-May.
A temporary correction?
Some trade participants believed that it was just a temporary freight correction, as the market fundamentals remained intact with high iron ore prices.
However, the freight rates were in fast decline for the key Brazil to China route, due to higher ballasting tonnage list.
Despite of that, Vale still managed to fix up several vessels for first-half August laycan window at low-$20s/wmt for moving iron ore from Tubarao to China route.
Meanwhile, the shipping demand remained healthy in the Pacific market despite the freight rates dropping to single digits.
Stagnant bunker prices fail to support freight rates
VLSFO prices remained stagnant at $334/mt at the port of Singapore, amid market concerns over rising COVID-19 cases affecting the global oil demand.
The Brent crude prices rose higher toward $43 per barrel, while the WTI maintained at the $40 per barrel mark, amid market bearish sentiments on surging coronavirus infections.
Beside coronavirus concerns, the large crude inventories buildup in the US also lowered price supports.
According to Energy Information Administration (EIA), the US crude oil inventories jumped by 5.7 million barrels to a total of 539.2 million barrels in the week to July 3, against market expectation of a decline of 3.114 million barrels for crude oil inventory for the period.