Capesize freight rates went into correction again with another selloff in the market, as the physical market struggled to keep up from previous rally.
The Capesize 5 time charter average then had a sharp drop of $3,182 day-on-day to $34,542 on Friday, following the selloff session.
The Baltic Dry Index (BDI) went with the dip and decreased by 4.48% or 138 points on-day to 2,939 readings, due to the softening freight rates.
Lesser iron ore shipments then previous year
The bearish market outlook was linked to major miners felling behind their iron ore exports since the start of this year.
According to Platts, Brazil’s Vale shipped 3.82 million mt of iron ore during the first week of May, down 35.13% on week and much lower than its average shipments at 4.62 million mt.
Rio Tinto then was plagued by workers shortage, wet weather and operation issues that resulted weak exports over the Jan-Apr 2021 period at 80.9 million mt amid an annualized rate of 311.6 million mt/year, which was still short of its guidance of 325-340 million mt this year.
However, BHP and FMG might step up their iron ore shipments in May and June period, as both miners were closing their financial year ending in June 30.
Falling bunker prices fail to support freight rates
The bunker prices softened amid mixed market outlook, as the price of VLSFO went down by $11/mt to $496.50/mt in the port of Singapore.
The weaker bunker prices had yet to benefit from better crude prices as Brent crude prices climbed toward $69 per barrel, with the restart of Colonial Pipeline after cyberattacks.
Meanwhile, some market participants were confident that the vaccination program might slow down the infection rate in India, which reportedly resulted in decline of infection and death in two major Indian cities.