Capesize freight rates hiked up on better market sentiments as shipping demand improved toward year-end with support of the strong bunker prices.
The Capesize 5 time charter average then went up by $938 day-on-day to $11,889 on Friday, albeit with considerably less activity on the FFAs.
The Baltic Dry Index (BDI) also moved upward by 4.31% or 50 points to 1,211 readings, due to better freight rates in the Capesize markets.
Mixed sentiments toward year-end
Although, the freight rates started to gain momentum that lifted market confidence, but there were still market concerns over the cyclone development in Australia that affected shipping activities.
The cyclone season had since slowed down the shipping activities in the Pacific market with latest cyclone-like weather bearing heavy rains on the eastern coast of Australia with the potential to affect the coal shipping routes.
The western coast of Australia was not spared by the cyclone season as well with Port Hedland clearing vessels in bracing for heavy rain and strong winds.
In contrast to the muted Pacific market, the Atlantic market was more lively, and were well supported by fixtures with thinner ballaster list off Brazil.
There were also more enquiries for moving cargoes in the Atlantic and fronthaul, but there were some market concerns over the upcoming rainy weather in Brazil that might disrupt iron ore shipments.
Firm bunker prices to stabilize freight rates
The recent strength in bunker prices offered some support to stabilize freight rates, as the VLSFO rose by $5/mt to $393/mt at the port of Singapore.
Bunker demand had improved toward year-end on news of the vaccines and market optimism of oil demand recovery in 2021 from the negative economic effects of the pandemic.
As such, the port of Singapore registered sales of marine fuels at 4.263 million mt in November, up 4.6% on-year, according to the country’s Maritime and Port Authority (MPA).
At this rate, the world’s largest marine fuels hub or Singapore might reach the coveted annual bunker demand of 50 million mt by the end of 2020, for the first time in three years.
The uptick was attributed to global bunker demand recovery in the Q4 2020, as well as shipowners prefer to refuel in large bunker hub rather than smaller ports.