Capesize market spiked further upward due to improving shipping fundamentals and higher iron ore demand.
Due to the good physical market, the Capesize 5 time charter average rose by $1,054 day-on-day to $5,247 on Wednesday.
In view of the strong Capesize market, the Baltic Dry Index (BDI) reached to a three-week high to 592 ratings, up 8.42% day-on-day on Wednesday.
Robust iron ore market to push freight rates
Iron ore prices entered a new level of over $100/mt level, which offered much support for freight rates and improved market sentiments.
The higher iron ore price prompted the shippers to sell more, especially in the key route of west coast Australia to China, as end-users seek more Australian medium grade ores for supply stability.
Major miners, like Rio Tinto, BHP and FMG were active in the west coast Australia to China route with several vessels being fixed. Thus, the freight indications on the key west coast Australia to Qingdao route were heard in the $4.95-$5.05/wmt range.
Higher bunker prices to further support freight rates
Bunker prices continued to rally on upward crude price movement as the VLSFO price surged up by $6 to $306/mt at the port of Singapore.
Brent crude prices hovered around the $39 per barrel, while the WTI maintained around the $36 per barrel level.
So far, there are some market optimism on higher oil demand as European countries started to ease lockdown measures.
In the meantime, China had almost resumed 90% of the pre-COVID levels by the end of April and moved higher in its oil demand since.
According to Wood Mackenzie, China’s oil demand is expected to recover to 13 million barrels per day (bpd) in Q2 2020, up by 16.3% from Q1 2020.