Capesize freight rates are expected to rise in the second quarter of the year, in anticipation of strong iron ore exports from Australia and Brazil.
After a strong Q1, shipping fundamentals remained robust with a relatively tight dry bulk supply amid plenty of commodity demand.
The Baltic Dry Index (BDI), then rose by 1.27% or 26 points to 2,172 readings on Apr 1, due to better market sentiments.
Better shipping fundamentals in Q2
Most market participants were bullish on shipping outlooks as miners ramped up iron ore and coal shipments in traditional peak season of Q2 on improved weather conditions.
However, there was some market concern over the tropical cyclone development off Timor, Indonesia, which is forecasted to move southward toward west Pilbara by Thursday, Apr 8, and might affect shipping operations there.
Aside from that, market sentiments remained buoy, with miners seeking actively for vessels at the start of the month especially for the key routes like west Australia to China.
Meanwhile, the ballaster list were reduced in the Atlantic market with lesser ballaster counts passing though Singapore, which supported higher rates.
Bunker prices rise on better market outlook
Bunker prices continued to climb on better market outlook, as the price of VLSFO hiked up by $4.50/mt to $487/mt in the port of Singapore.
Market participants expected better crude oil prices with some promising economic figures from rising air travelers in the US by the end of March 2021.
In the meantime, China is expected to lead in the global oil consumption for petroleum products, especially for the latter half of the year.
However, there was some market skeptics as well, as OPEC+ Joint Technical Committee (JTC) revised demand growth of 5.6 million bpd, down 300,000 bpd compared to previous oil demand forecast.