Capesize freight rates spiraled down on thin market activities as holidays season approached for Chinese trade participants.
The Capesize 5 time charter average then dipped by $698 day-on-day to $11,359 on Tuesday, after trading at a tight range.
The Baltic Dry Index (BDI) also dropped by 0.84% or 11 points to 1,306 readings, despite some strength in Panamax rates but dragged down by softening Capesize rates.
Typical quiet market before Chinese holidays
Market activities had cooled down ahead of the Lunar New Year holidays with the absence of Chinese trade participants.
According to trade sources, this was rather normal in Q1, with firm rates in January carryover from previous Q4, but only to slow down ahead of the Spring Festival holidays.
There was some coal shipment moving out of eastern Australia to South Korea, while trade participants were still waiting for further easing on the restriction of Australian coal shipments to China.
Some trade participants were hoping there will be new updates for lifting of the informal ban and waited eagerly for further development of the recent discharge of Australian coals in Jingtang port.
Meanwhile, the Atlantic market came under pressure by the low shipping demand and lengthy ballasters with indicative bids for shipping iron ore from Tubarao to Qingdao for March laycan heard in the mid-$14s/mt.
Bunker prices rally further on oil production cutbacks
Bunker prices continued to rally on high crude prices but offered limited support to the falling freight rates, as the price of VLSFO rose further by $6/mt to $500/mt in the port of Singapore.
Brent crude oil prices achieved another high as prices broke the $60 per barrel mark, supported by committed crude output cut from OPEC +.
Moreover, Russian oil production also came to a decade low at 10.27 million barrels per day, while oil demand is expected to see a strong rebound this year as global economy recovered gradually from the pandemic.