Capesize freight rates rebounded from the slump on bullish sentiments with a wave of buying activities for November contracts.
The Capesize 5 time charter average rose by $1,386 day-on-day to $17,151 on Thursday, thanks to flurry of purchases in the earlier session, then followed by selling pressures from some profit-takers near the closing session.
The Baltic Dry Index (BDI) then surged up by 4.09% or 55 points day-on-day to 1,401 readings, following the rally of Capesize market.
Stronger fundamentals for the rebounding freight rate
There was more shipping demand to move iron ore cargoes from west Australia and Brazil, as market sentiments had improved for both basins.
For the Atlantic market, Platts assessed the indicative freight rates for a Capesize ship to move 170,000 mt of iron ore from Tubarao to Qingdao at $17.50/wmt, up $1.25/wmt on the day, due to more active participants in seeking vessels for November laycan.
There was also some market talks of shipping more Australian coals to India, which place some pressure on coal shipments from South Africa route of Richards Bay to India route.
Similarly, the freight rates had firmed in the Pacific market due to high shipping demand from mining majors as they tried to fulfill their annual guidance in Q4.
VLSFO prices dip over market uncertainty
VLSFO prices dropped by $1.50/mt to $338.50/mt at the port of Singapore, following the mixed market outlook in oil demand.
Crude oil prices rallied on the likelihood of the US second fiscal stimulus package being reached to boost the coronavirus-hit economy, which led to higher consumption of oil products.
Despite the short-term optimism, the World Bank foresees global oil demand to fall under the pre-Covid-19 level for next year, except for China due to its quick economic recovery.
Thus, the World Bank expect an average price of $44 per barrel for 2021, slightly better than the average of $41 per barrel in 2020.