Capesize freight rates slipped at the start of the month, indicating a slow start to the holiday season as more tonnage returned to the market.
The Capesize 5 time charter average, then dipped down by $158 day-on-day to $37,023 on Wednesday, amid a choppy market.
The Baltic Dry Index (BDI) however, rose by $29, up 0.96% day-on-day, to $3,047, due to better freight rates.
Ports reopening to inject more tonnage
Freight rates retreated on increased tonnage supply as the better weathers resulted in more reopening of Chinese ports.
Thus, trade sources expected a huge influx of tonnage to return to the Pacific market, though fresh enquiries for iron ore and coal shipping demand from Japan and South Korea may help to digest some of the surplus tonnage.
On the contrary, the Atlantic market faced thinner tonnage list with more fresh demand, especially in the North Atlantic market. There was also more iron ore and coal shipping demand coming from South Africa, despite the threat of new Covid Omicron variant.
Bunker prices plunge on demand threat from Omicron
The bunker prices fell on softening crude prices, as the price of VLSFO dropped by $4/mt to $593.50/mt in the port of Singapore.
Market sentiments were weighed down by spread of Omicron variant among developed countries with first case being reported in the US this week.
The fast-spreading virus variant may lower oil demand as affected countries might adopt stricter lockdown measures to contain the virus.
However, some market sources remained bullish on crude prices, projecting Brent prices to maintain at $85 per barrel in 2022 or even higher at $100/bbl with the further relaxation of global air travel restrictions.