Capesize rates reached another new height again and broke the $20,000 level amid the freight rally.
Thus, the Capesize 5 time charter average increased by $6,244 day-on-day to $25,280 on Thursday, another year-high rates, even after a selloff by trade participants for profit-taking.
Supported by robust Capesize market, the Baltic Dry Index (BDI) achieved the highest level for the year 2020 at 1,527 points, up 22.55% day-on-day.
Bullish momentum in Pacific and Atlantic basins
In the Atlantic markets, the red-hot Brazil-to-China iron ore route continued to drive freight rates higher amid tight supply for July laycans.
Some trade participants expect a big catchup of shipments during the second half of year, as Vale tried to fulfill its annual guidance of 310-330 million mt amid rising coronavirus outbreak in Brazil.
Therefore, there was more ballasting interests for shipowners to ballast their vessels toward Brazil to meet the anticipated shipping demand there.
Meanwhile in the Pacific market, the freight rates firmed up on healthy cargoes out of Australia as the key Port Hedland-Qingdao route was assessed at $9/wmt, up $1.15/wmt from June 17.
Correction in bunker prices following lower sales
VLSFO prices fell after the recent rally, following a decline in bunker sales among the world’s major bunkering hubs.
Fujairah, the bunkering hub of the Middle East region saw its bunker volume dropped by 200,000-300,000 mt in May, as compared to the monthly average volumes at 700,000-800,000 mt per month.
Similar trend was seen in Singapore, as total demand fell by 2% on-year to 3.925 million mt in May, following lower demand amid coronavirus pandemic.
Thus, the VLSFO prices dropped by $2.50/mt to $329/mt at the port of Singapore, despite the upward movement of crude oil prices.
As such, the Brent crude prices rose toward $42 per barrel, while the WTI moved upward toward $40 per barrel level.