The Baltic Dry Index (BDI) declined on Wednesday for the fifth consecutive business day after reportedly posting its worst one-day plummet in almost 40 years. The BDI, which serves as a market barometer for dry bulk shipping, slipped 5.9% on Wednesday to 1,176 points after dropping 17.5% on Tuesday to 1,250 points from 1,515 points on 23 December. The Baltic Exchange did not report new rate data from 24 December to 2 January in observance of the Christmas and New Year holidays. Reuters reported on Tuesday that the one-day tumble to 1,250 points was the largest one-day drop that the BDI has experienced since 1984.

One broker summed up why he thinks the index has done so poorly in recent days, having fallen by nearly a third from 1,723 points recorded on 21 December. “China, China, China,” Giuseppe Rosano, founder of UK broking house Alibra Shipping, told TradeWinds. “I cannot see anything getting better until several weeks after Chinese New Year.”

The Baltic Exchange’s dry bulk rates have fallen steadily since 21 December as China tries to revive its struggling real estate sector, deals with surging Covid-19 cases, and shuts down manufacturing for the week-long Chinese New Year starting on 22 January.

In that time, the exchange’s Capesize 5TC of spot-rate averages across five key routes has slid 46% to 12,575 per day on Wednesday, while the Panamax 5TC has cascaded 13.8% to $12,400 per day. The Supramax 10TC has slipped 17.3% over this period to $10,037 per day on Wednesday, while the Handysize 7TC declined 13.3% to $10,671 per day.

The BDI’s one-day drop on Tuesday does not accurately reflect shipping rates’ steady decline over the past 10 days because the index was inactive during this time, said John Kartsonas, founder of Breakwave Advisors, an asset management firm that runs a dry bulk exchange-traded fund. “For 10 days there has been no Index, but rates have been steadily softening,” he told TradeWinds. “It is January, and the broader expectation is for softer rates. Nothing surprising here.”

But early January “has been quite constructive for dry bulk” in the past because cargo owners usually rush to fix ships once the holidays end, he said. “Now, the surprising factor would be a counter seasonal rally,” he said. “Whether this translates to a surprising pop in rates is yet to be seen, but I would not expect anything but a short-term pop if that happens.”