Capesize freight rates hiked up on market optimism with rising Panamax segment that led to market talks of using Capesize vessels for Panamax cargoes.
The Capesize 5 time charter average then rose sharpy by $3,5542 day-on-day to $15,856 on Wednesday, in view of better post-holiday demand in key routes.
The Baltic Dry Index (BDI) also surged higher given the firmer Panamax rates that resulted a gain of 17.46% or 261 points to 1,756 readings.
Supercycle is here again
The bullish FFA market seemed to indicate that the ‘supercycle’ will occur again with rising demand for commodities that benefited the dry bulk segment.
“2020 may have been the year of equities, but 2021 is gearing itself up to be the year of commodities”, said John Banaszkiewicz, CEO of Freight Investor Services (FIS) on the market upturn.
His optimism was based over 75,000 lots being traded last week on freight that reminisced the last booming dry bulk supercycle period seen more than decades ago in 2008 period.
Nevertheless, the physical Pacific market reflected the bullish mood with all three mining majors, Rio Tinto, BHP and FMG active in the seeking vessels for the western Australia to China route for early March laycan.
Similarly, the key Brazil-China route attracted much market attention for March loading window with freight indications heard in a range of $18-$19/wmt.
Bunker prices rally on better demand
Bunker prices continued to extend their gains on higher demand, as the price of VLSFO rose by $1/mt to $513.50/mt in the port of Singapore.
The bunker price rally was in line with higher crude prices as Brent crude prices headed toward $65 per barrel, in view of recovering global oil demand.
Some market participants even predicted an oil supercycle ahead, supported by government stimulus packages that boosted oil consumption like the US $1.9 trillion stimulus.