Capesize freight rates went into correction after recent paper market rally over thin physical market activities.
The Capesize 5 time charter average then plunged into a sharp drop and went down by $1,338 day-on-day to $41,514 on Friday.
The Baltic Dry Index (BDI) however dropped slightly by 0.90% or 29 points on-day to 3,183 readings, after finding support from smaller vessels.
A game of catchup for the physical market
The recent FFA rally will be a one side affair if the physical market did not catch up as there still lack of fresh cargoes in both basins.
Apparently, some market participants were heard to be still reassessing the market after the long holidays in early May, while there was still some standoff between owners and charterers in the Atlantic basin especially for the Brazilian shipments.
Meanwhile, the Pacific market seemed to have the potential to go higher with major miners seeking vessels actively for the key west coast Australia to China route, despite worsening bilateral relationship between the two countries.
Little support from the weak bunker prices
The bunker prices continued to fall on weak market sentiment, as the price of VLSFO dipped by $5.50/mt on-day to $501/mt in the port of Singapore.
The price dip contrasted with the strength of crude oil prices which were moving toward $70 per barrel, leading to some market speculation of Brent crude oil price to hit further to the $80 per barrel level during the summer season.
Some investment banks even forecasted a bullish level for oil prices to range $80-$85 per barrel level during the second half of the year, despite the high infection covid rates in India.