Dry bulk shipping’s capesize and panamax spot markets have weakened since Monday, perhaps heading into correction after rallying over the past several weeks, market watchers said. The Baltic Exchange’s capesize 5TC, which averages spot rates across five key routes, has fallen 13.4% over the past two days to $33,069 per day on Wednesday. The spot rate for the C10 transpacific round voyage between China and Australia slid 13.4% to $33,069 per day between Monday and Wednesday, while that for the fronthaul C9 from Europe to China dropped 11.6% to $55,122 per day. “Transatlantic or fronthaul business did not offer much support from the Atlantic,” Baltic Exchange analysts wrote on Wednesday in their daily take on dry bulk shipping. “Activity from Brazil was limited whilst the market was seeking more clarity. The Australia-to-Qingdao trade was rumored to slip further to below $14 post index publishing.

The two-day drop in capesize rates is most likely driven by market cyclicality, since the large bulkers have more than tripled since April, said John Kartsonas, founder of dry bulk ETF-trading platform Breakwave Advisors. “Now is time for some consolidation and correction,” he told TradeWinds. “We are still in a tight supply environment due to trading dislocations, so I do not foresee a collapse. Caution, though, is warranted because when all expect something, in this instance a mild correction, something else usually happens.”

The spot rate for the C5 route between Western Australia and Qingdao, China, route came in at $14.25 per tonne, according to the exchange’s latest figures on Wednesday. That represents an 8.6% decline from Monday’s freight rate of $15.341 per tonne. Australian miner Rio Tinto fixed two unnamed capesizes on Tuesday to ship 170,000 tonnes each of iron ore from Dampier, Australia to Qingdao at rates of $14.65 and $14.70 per tonne. Loading is set to take place from 9 to 12 June. Rio Tinto also hired an unnamed capesize on Monday to ship the same quantum of ore on the route at $15.25 per tonne. The ship is set to be loaded from 8 to 10 June.

Panamax spot rates have also fallen over the past two days as its 5TC dropped 4.7% to $28,965 per day on Wednesday. “The panamax market continued to soften further with all routes seeing significant corrections,” Baltic Exchange analysts said. The exchange’s analysts noted that this dry bulk sector “lacked any fresh momentum”, perhaps in part due to an “easier” forward curve showing upward momentum on paper. Forward-freight agreement (FFA) rates for contacts in June through to August, and for the year’s remaining three quarters, all improved on Wednesday. July produced the highest FFA rate for this period by picking up $268 per day on Wednesday to reach $30,079 per day. “Basic market fundamentals appeared to be taking a hold on the market right now with both basins requiring fresh volume in order to turn the tide,” analysts wrote.

The panamax rates are probably getting pulled down by the falling capesize rates, Kartsonas added. “We will see if this will trickle down to even the smaller sizes,” he said.