The capesize bulker market took another plunge on Thursday, continuing a steady fall as fears mount over China's coal shortage putting sharp brakes on the nation's economy.

The capesize 5TC, a spot-rate average weighted across five key routes, dropped 5.8% to $70,181 per day, according to Baltic Exchange data.

The China-Brazil roundtrip voyage saw the greatest decline among the benchmark routes, losing $5,750 per day to come in at $58,960 per day.

Thursday's average spot rate for capesizes reflected a 19.2% plummet over the past seven days from $86,953 per day — a high not seen since 2008.

Capesize bulker spot rates are still at 'incredible levels' despite their decline in recent days, according to Jefferies analyst Randy Giveans. Photo: Johnathon Henninger/TradeWinds Events

"Part of that is due to fears around China shutting down due to an energy crisis, but rates falling should be expected as the forward curve is showing rates will be lower in the coming weeks and months," Jefferies analyst Randy Giveans told TradeWinds.

"All that said, capesize rates are still at incredible levels."

A scarcity of cargoes in the Atlantic Basin is also weighing down on capesize rates, according to Baltic Exchange market analysts.

"However, some owners still showed a bit of resistance and optimism for having an improved return as tonnage remained relatively starved," the Baltic Exchange said on Thursday in its daily report on the dry bulk market.

Paper market

The forward curve for capesizes is trending below the physical market, despite showing slight gains on Thursday.

The forward freight agreement (FFA) rate for October picked up $322 per day to reach $69,179 per day, while the November figure jumped $1,178 per day to $49,571 per day.

The FFA rate for the fourth quarter improved $661 per day to $53,024 per day.

For all of 2022, it gained $392 per day on Thursday to achieve $28,509 per day.

The New York-listed bulker equities are falling with the dropping capesize rates, but they have disconnected from the forward curve, Giveans said.

"Equities were much higher when the 2022 FFA curve was $24,000 per day, compared to today’s $28,000 per day," he told TradeWinds.

"All that being said, we remain bullish on dry bulk, especially going into what should be a very strong and bullish earnings season."

Diana Shipping, an owner of 12 capesizes that trades on the New York Stock Exchange under the ticker symbol DSX, slipped 6.9% to $5.15 per share by mid-afternoon on Friday.

Genco Shipping & Trading, which owns 17 capesizes and trades on the New York Stock Exchange under the ticker symbol GNK, meanwhile slid 8.1% to $17.17.

"Indeed, we are in a correction mode for capesizes," John Kartsonas, founder of asset-management advisory firm Breakwave Advisors, told TradeWinds.

"However, the sub-cape segments are going strong, and that is very important, in my view.

"There should be a natural support level coming from the panamax and supramax markets, as there is naturally some level of substitution once freight becomes more competitive for larger ships."

The panamax 5TC picked up $580 per day on Thursday to come in at $36,204, while the supramax 10TC improved $434 per day to $38,960 per day.