Capesize freight rates softened amid thin physical activities and bearish shipping demand outlook, especially in the Atlantic basin.
The Capesize 5 time charter average, then plunged down further by $1,169 day-on-day to $20,933 on Friday, from further selloff in paper market.
The Baltic Dry Index (BDI) also dropped further by 1.38% or 34 points on-day to 2,438 readings, due to weakening freight rates.
Shipping demand to lower amid typical lull in June
With the new round of freight corrections, some trade participants believed that the market had yet to find a bottom and further selloff may occur in the near term.
As the Chinese steel market had entered the typical lull period in June due to rainy season, and many trade participants doubted whether there will be more shipping demand to move iron ore cargoes.
Meanwhile, there was also market talk of ship delays among the Chinese ports with long vessels queue waiting to be used.
In the meantime, the freight rates continued to weaken in the key Brazil to China route with muted activities, while a standoff remained between owners and charterers.
Rising bunker prices fail to support freight rates
The bunker prices continued to rise on stronger crude, as the price of VLSFO rose by $4/mt to $528/mt in the port of Singapore.
Despite the higher bunker prices, it had little impact in lifting the softening freight rates, which were affected by low shipping demand and high tonnage supply.
Meanwhile, the market participants were more optimistic over oil demand recovery due to high jet fuel consumption in Europe and North America after a pickup of air travel amid falling Covid cases.
Thus, Brent crude oil price rose above $70 per barrel and seemed to stay at the level for a while, buoyed by rising global oil consumption.