Capesize freight rates continued the downward trend due to softening physical market that resulted selling pressure in the paper market.
The Capesize 5 time charter average then fell by $1,840 day-on-day to $32,702 on Monday, following another selloff session.
The Baltic Dry Index (BDI) also went down and decreased by 2.82% or 83 points on-day to 2,856 readings, due to the softening freight rates.
Weak physical activities in both basins
There was also sell off in the physical market, which some trade participants expected further freight correction ahead without any signs of market bottoming out yet.
Most market players were heard to be on sideline in the Pacific market, as major miners like BHP and FMG were going to close their account book soon for their fiscal year ending on June 30, thus less likely to increase shipments.
Meanwhile, the ballasters list continued to build up in the Atlantic market till mid-June that dampened further upticks in freight rates. In the meantime, there was also less enquiries for coal shipping demand out of South Africa.
Small gain in bunker prices unable to support freight rates
The bunker prices rebounded from recent slump, as the price of VLSFO inched up by $1.50/mt to $498/mt in the port of Singapore.
However, the high bunker prices were unable to halt the declining freight rates, though it benefited from recent crude strength as air travels began to recover.
According to the US Transportation Security Administration, a total of 1,850,531 passengers traveled via planes on May 16, up from just 253,807 passengers on the same day last year.
Thus, the jet fuel demand is recovering as it was estimated that US air travelers had increased by six-fold since May 2020.