Capesize freight rates continued to soften at the start of the week, following the previous slump over bearish market sentiments.
The Capesize 5 time charter average, then dropped down by $630 day-on-day to $32,785 on Monday, after a selloff in the paper market.
The Baltic Dry Index (BDI) then slipped down by 0.87% on-day, down 28 points to 3,190 readings on softening freight rates.
Low market confidence on freight market
Some trade participants expected further corrections in the freight market, given the selloff in the FFA market and scant activities in the physical market.
Steel demand had slowed in China in the typical lull season, leading some trade participants to cast doubts on shipping demand for raw materials.
Thus, the Pacific market was muted with inactivity’s of miners in western Australia, while there were some concerns over the scheduled maintenance of the terminals.
Besides, the iron ore shipments of mining majors had declined for Jun 13-19 period, as Platts recorded 19.22 million mt of iron ore exports from Rio Tinto, BHP, Vale, FMG and Roy Hill, down 5.7% on-week and lower than average volume at 21.38 million mt.
Falling bunker prices fail to support freight rates
The high bunker prices provided little support to bearish freight rates, as the price of VLSFO inched up by $3/mt to $530/mt in the port of Singapore.
The uptick related to the firm price movement of the crude oil, with growing market optimism on global oil demand recovery with easing of lockdown measures.
Some market optimists even believed that the recovering market could absorb the additional 1 million barrels of Iranian oil, if the talks led to some lifting of trade sanctions.