Capesize rates firmed on better market sentiments with freight rates getting some support from the port congestion situation in China.
Thus, the Capesize 5 time charter average inched up by $135 day-on-day to $19,339 on Wednesday, with a late rally in Sep and Q4 contracts that added to bullish market tone.
Thus, the Baltic Dry Index (BDI) continued its upward movement with gains of 1.27% or 30 points day-on-day to 1,540 readings.
Higher ton-mile demand due to port congestion
Some market participants expected freight rates to be supported by longer processing time for the issuing of permits for Australian iron ore imports.
As the longer waiting time might result in higher port congestion among Chinese ports and raised ton-mile demand that is measured by multiplying the volume of cargo moved in metric tons by the distance traveled in miles.
Some market participants also expect the Pacific market to rally in near term due to the thin tonnage list amid fleet inefficiencies from port congestion and crew replacement issues.
However, the shipping freight rates were dragged down by the high number of August ballasters in the Atlantic market, especially for the key Brazil to China route.
Bunker prices stay static from recent rally
VLSFO prices remained flat at $353/mt for the port of Singapore, after the recent rally and some market participants expect further correction in view of poorer oil demand ahead.
According to the Energy Information Administration (EIA), US crude oil production is estimated to drop by an average of 990,000 barrels per day (bpd) for an average of 11.26 million bpd.
The expected drop was higher than the previous estimated drop of 620,000 bpd announced in July by EIA, due to lower global oil demand related to Covid-19.