The capesize market, which had been pushing new highs, has been on a descent for the past week. According to Fearnleys, there has been “a sudden drop in prompt iron ore volumes”, with only one key miner active on the key Australia to China route. Although slightly less dramatic, transactions were also said to be “few and far between” on the Brazil-China trade, the brokerage said in a note. However, congestion remains significant, with the number of ballasters at a historical low, leaving “a delicate supply and demand balance where tonnage that is actually workable keeps being very limited”, it said.

Arrow Research said that demand for iron ore was taking a hit given the energy crisis inflicting several countries including China, with power rationing both dampening steel demand as factories shut down, and curtailing production as steel mills cut run-rates.

While iron ore stockpiles in China are at comfortable levels, there is little indication that the situation will ease over the winter months, as households will be prioritized for energy rather than industry, the brokerage said, adding that iron ore use will remain below 2020 levels this quarter of the year.

The World Steel Association highlighted steel contraction in China of 1% this year compared with 2020 and no growth in 2022. The average weighted capesize rate on the Baltic Exchange closed at $64,417 per day on October 15, a drop of $5,764 from the previous session.

The market has been on a slide since a high of $86,953 per day for the 180,000-dwt assessment on October 7. In this volatile environment, operators were said to be keen on any period charters, with a one-year fixture concluded at $33,000 per day for a 2010-built, 176,000 dwt vessel, according to Fearnleys.