Capesize market rebound to better shipping demand, with improving freight rates in both the Atlantic and Pacific basins.
Thus, the Capesize 5 time charter average rose by $587 to $3,462 on Tuesday, as some trade participants believed that the market had bottomed out.
Buoyed by the better Capesize market, the Baltic Dry Index rose over 6.09% on-day to 453 readings by Tuesday, driven by the market optimism.
Fresh cargoes injection for Pacific market
Once again, Pacific market remained the main driver for freight market after a busy trading day with higher freight rates recorded.
Mining majors were active in the market with handful of vessels fixed for the key west coast Australia to Qingdao at the range of $4.35-$4.60/wmt for early June laycans.
However, there was some concerns over thermal coal shipping demand off east coast of Australia as China adopted trade protective measures to restrict coal imports.
Standoff in Atlantic market
The Atlantic market was a second fiddle compared to the robust Pacific market as there was a standoff between owners and charterers.
Due to the standoff, there was limited shipping activities in the Atlantic market, and freight indicated on the key Brazil to China route was in the $7.45/wmt to $8/wmt range.
Moving forward, there was some concerns over tightening iron ore supply in Brazil due to rising coronavirus cases, which may prompt stricter lockdown of the country.
Bunker prices to boost freight rates
The rising bunker prices had also lifted freight rates as the VLSFO bunker prices rose by $6 to $278/mt at the port of Singapore.
Brent crude prices continued its upward climb toward $35 per barrel level, while the WTI hovered at the $32 per barrel, after oil demand showed signs of recovery with relaxing of lockdowns in various countries.
Despite the market optimism, International Energy Agency (IEA) forecasted a 8% drop in bunker demand for Q2 2020, while the overall bunker demand for the year is expected to fall 5% year-on-year.