Capesize freight rates continued to rally on better physical demand with firm support from smaller vessels.
The Capesize 5 time charter average then increased by $942 day-on-day to $18,873 on Thursday, despite some profit-takings during the trading session.
The Baltic Dry Index (BDI) also hiked up higher by 5.23% or 110 points to 2,215 readings, given the better freight rates, especially the Panamax freight rate which rose to a 10-year high.
Better shipping fundamentals with firm support from smaller vessels
The Capesize freight rates were bolstered by strong shipping activities on smaller ships, which were driven by the robust grain demand.
Moreover, the lack of Panamax vessels continued to suggest that Capesize vessels may be used to fill in the supply gap for grain shipping purposes.
However, there was some slowdown of iron ore shipping activities in the Pacific market, due to the absence of miners in the market.
On the contrary, the Atlantic market experienced more shipping activities, especially in the key Brazil to China iron ore route. Plus, the ballaster list had also been reduced with a good number of vessels being diverted to West Africa.
Meanwhile, trade participants also expected more iron ore shipment out of Brazil in Q2, as the rainy season came to an end soon.
Falling bunker prices fail to support freight rates
The declining bunker prices provided little support to the freight rates, as the price of VLSFO continued to slide down by $4/mt to $512/mt in the port of Singapore.
Crude oil prices continued to weaken as oil demand outlook were rolled back by market concerns over renewed lockdowns in European countries like Poland and Italy.
Meanwhile, Panama’s bunker sales declined by 5.5% on-year to 418,415 mt in February, based on data from Panama Maritime Authority. The falling bunker sales were attributed to strong competition from other regional ports located in US Gulf that lowered Panamax’s market share.