Capesize freight rates dived sharply upon political risks with worsening relations between Australia and China and its impact on the iron ore trades.
The Capesize 5 time charter average then reversed into huge losses and went down by $1,965 day-on-day to $42,852 on Thursday.
The Baltic Dry Index (BDI) also dropped by 1.65% or 54 points on-day to 3,212 readings, due to bearish market outlook.
Market spooks by China-Australia trade spat
The FFA market collapsed on market concerns over sour relations between China and Australia after the recent suspension of economic dialogue.
Some trade participants expected the worsening bilateral ties to have a huge impact on the iron ore shipments between the two countries, which had been yet to be confirmed.
On the contrary, the major miners were still keen in securing vessels for the key western Australia to China route, despite the low market confidence in the paper market.
Meanwhile, the Atlantic market posed a stronger market outlook with more fixtures heard being done to export iron ores from Brazilian miners. Then, the stronger freight rates led to market speculation that more ballasters might move west to take advantage of firm rates and away from the political risks.
Falling bunker prices lend little support to freight rates
The bunker prices plunged down on bearish market sentiment, as the price of VLSFO nosedived by $9.50/mt on-day to $506.50/mt in the port of Singapore.
The recent oil rally was stalled by worsening infection situation in India, which reported fresh record of new daily coronavirus cases.
Thus, Brent crude prices fell short of the $70 per barrel mark, while there was some profit-taking among trade participants that led to lower market sentiment.