The capesize bulker sector fell sharply on Tuesday amid typical market volatility.

The capesize 5TC, a spot-rate average weighted across five key routes, plummeted 16.1% to $32,838 per day, according to the Baltic Exchange.

"The big swings are a result of a few extra cargoes shooting rates higher, but a few extra vessels cause rates to fall sharply," Jefferies analyst Randy Giveans told TradeWinds.

"Capesize rates will always be volatile considering they primarily move three or four cargoes to and from a handful of ports, especially more volatile than the smaller asset classes that move dozens of cargoes from and to hundreds of ports."

The capesize benchmark transpacific roundtrip route between Australia and China fell the most since Monday, cascading 12.1% to $33,629 per day.

Lower rates — and thus lower share prices on dry bulk equities — are to be expected as the typically weak first quarter nears, but they should be better than what the paper market shows, he said.

The Baltic Exchange's forward freight rate for capesizes during the three months of 2022 came in at $19,243 per day on Tuesday.

The futures market has been discounting a drop in spot rates for a while, so the question is how accurately it projects where they will bottom out, said John Kartsonas, founder of Breakwave Advisors and its dry bulk ETF-trading platform.

"For now, the futures are telling us that spot will drop to the mid-teen level in the next two months, so basically another 50% drop from here," he told TradeWinds.

"We shall see."