Capesize rates continued the bullish run over Brazilian supply concerns, while high construction activities in China support iron ore demand.
As such, the Capesize 5 time charter average jumped by $438 day-on-day to $7,745 on Monday, after more European players entered the market and pushed up rates.
The Baltic Dry Index (BDI) followed the rally and saw the index touching close to the 700 mark, but slipping to end the day at 698 points, up 2.80% day-on-day.
Big catch-up for iron ore shipment
With iron ore prices over the $100/mt, many trade participants are bullish on the freight market with good iron ore demand from China.
Some trade participants expected a big catch up for Vale in the latter half of the year, if the miner is committed in fulfilling annual output guidance of 310-330 million mt for 2020, amid rising coronavirus outbreak in the country.
If not, the other suppliers like the Australia-based miners may maximize throughput to fill in the supply gap left by Vale, which will evidently create more shipping demand.
So far, the Australia-based miners are very active in the key west coast Australia to China route and heard to fix at least three fixtures for late June laycan at the $5.60/wmt-$5.80/wmt range.
Bunker prices firm on OPEC + extension
Bunker prices jumped as OPEC + agreed to extend output cut for another month and saw VLSFO surged up by $20.50/mt day-on-day to $327/mt at the port of Singapore.
This was in line with the crude rally, which hiked the Brent crude prices to $40 per barrel, while the WTI at around $37 per barrel level.
Despite OPEC + extension of output cut, Goldman Sachs went bearish on the oil market and expects the Brent Crude price to slip back to $35 per barrel in the short term.
According to Goldman Sachs, other oil producers outside the OPEC +, such as the US shale oil producers and Libya may restart some oil productions soon, which may upset the market fundamentals.