Capesize freight rates rose higher after a flurry of fixtures were being done in the Pacific market, lifting market sentiment after previous correction.
The Capesize 5 time charter average then inched up by $190 day-on-day to $12,186 on Wednesday, due to significant gains at the physical market.
The Baltic Dry Index (BDI) followed the rally and booked a gain of 1.61% or 19 points to 1,197 readings, due to better freight rates.
Pacific drives the market with flurry of fixtures
The Pacific market was the main driver for the rally, with good number of fixtures being done on the west Australia to China route.
For instance, mining major, Rio Tinto was heard to secure at least eight vessels for early December laycan between $6.95/wmt and $7.15/wmt range.
However, some trade participants were disappointed at current range as they expected freight rates to rise even higher from the high number of transactions.
Meanwhile, it was heard that the expected bad weathers in Brazil, the Mediterranean and China were partially responsible for the freight rate spike.
As the unfavorable weather might cause vessel delays, which led to replacement fixtures being done at higher rates.
Bunker prices rally on market optimism of better oil demand
The bunker prices continued to rally on higher crude oil movement, as the VLSFO rose by $9.50/mt to $386.50/mt at the port of Singapore.
Crude oil prices moved higher, buoyed by market optimism on returning oil demand due to the effectiveness of the coronavirus vaccines.
Moreover, the recent crude oil inventory draw reported by the Energy Information Administration (EIA) also lifted market sentiment with draw of 800,000 barrels for the week ended on November 20.