Capesize freight rates rose on better fixtures done on both basins, that lifted the recent bearish market sentiments.
Thus, the Capesize 5 time charter average then hiked up by $656 day-on-day to $10,951 on Thursday, amid the recent volatility in the market.
The Baltic Dry Index (BDI) also went up by 3.48% or 39 points to 1,161 readings, due to the improving freight rates in the Capesize and Panamax markets.
Cyclone concerns in the Pacific
Despite cyclone warnings off the coast of western Australia, miners continued to seek for vessels to move iron ore to China, given the high incentive from recent iron ore prices rally.
However, iron ore terminals, like Port Hedland had since cleared large-sized vessels on Dec 10, in preparation for cyclone making landfall at the coast on Friday.
Thus, the indicative freight rates were heard at the range of $6.40-$7/wmt for the key west coast Australia to Qingdao route.
In the Atlantic market, there was some thinning of the ballaster list, as some India-based vessels chose to ballast toward the Pacific to take advantage of the high iron ore demand, instead of sailing toward Brazil.
On the demand side, miners like Vale had returned to the spot market with more biddings for January laycans, and lifted indicative freight rate for the Brazil to China route at the range of high-$11 to mid-$12/wmt.
Falling bunker prices fail to support freight rally
The volatility of bunker prices lent little support to the freight rates, as the VLSFO dropped slightly by $0.50/mt to $388/mt at the port of Singapore.
The slip-up in bunker prices was in contrast with better crude oil price movement, with Brent crude prices reaching $50/mt for the first time since March this year.
The market optimism was based on vaccines releases among US, UK and Canada by year-end, which might restore oil demand to pre-Covid level.
Moreover, India joined the chorus of market optimism by re-opening its oil refineries that operated at 100% capacity in November to meet growing domestic oil demand.