Capesize rates started the week on bullish note as bad weather, crew replacement and stricter quarantine measures affected the tonnage supply.
The Capesize 5 time charter average hiked up by $755 day-on-day to $19,051 on Monday, as market participants expected freight rates recovery over short term.
Due to the improvement in Capesize, the Baltic Dry Index (BDI) went up by 2.59% day-on-day to 1,385 readings on Monday.
Congestion in the Pacific
With Typhoon Hagupit making landfall in China on Tuesday, many shipping operations were disrupted at the southern coastal ports of China.
Besides, some ship crews were tested positive for the coronavirus on-board, which made crew replacement harder. Moreover, many of these sailors were from the Philippines, which in turn had taken stricter quarantine measures to contain the coronavirus spread within the country.
These disruptions had supported freight rates and might affect tonnage supply in the Pacific region. Furthermore, the shipping demand had also increased in the Pacific, with more fresh shipping inquiries among the miners and operators.
In contrast, the Atlantic market seemed much quieter in comparison to the Pacific, however the rates were talked at higher levels amid decent ballasters’ list.
Shaky bunker prices offer little support to freight rates rally
VLSFO prices slid by $7/mt to $335/mt at the port of Singapore, following the weakness in crude oil prices and easing of oil output cut.
The OPEC + had relaxed output cut in August to 7.7 million bpd till December, instead of the previous 9.7 million bpd cut. Due to the higher output, the Brent Crude prices dropped toward $43 per barrel, while WTI crude prices dipped toward the $40 per barrel.
The easing of output cut was in line with gradual recovery of global economies amid the coronavirus pandemic. However, some market participants were skeptical of recovery, due to the fragile state of the energy market.