Capesize rates hit a record high for the year as strong iron ore demand continue to support shipping demand.
The Capesize 5 time charter average reached $14,786 on Tuesday, the highest level in the year and up $1,489 at day-on-day basis.
Buoyed by the robust Capesize market, the Baltic Dry Index shot up beyond the 1,000 points to 1,054 points, the highest level as of 2020.
A big catch-up for Brazilian iron ore shipment
Brazil’s shipping demand outlook had improved due to tighter ballasters list and robust iron ore demand.
According to trade source, the potential supply outages in Brazil due to rising coronavirus cases, had prompted more miners to maximize throughput, which led to more shipping demand for iron ore exports.
Meanwhile, some trade source expected a ‘big catch up’ for shipping iron ore cargoes in the second half of year if mining major, Vale kept to its output guidance for the year amid the coronavirus pandemic.
Moreover, some trade sources expect stock rebuilding among Chinese ports for the second half of the year, due to a huge drawdown of iron ore port inventory in China that declined by 10 million mt since the start of the year.
Higher bunker prices lend support to freight rates
VLSFO prices rose by $14.50 to $323/mt at the port of Singapore, following the rise in crude oil movements.
Brent crude prices broke the $40 per barrel barrier and strived toward $41 per barrel, while the WTI went up toward the $38 per barrel, due to on better oil outlook.
Despite some improvement in oil demand, the International Energy Agency (IEA) expect oil demand may not recover to pre-pandemic levels until 2022 at the earliest.
As the global market might be hit by second wave of the pandemic that pushed for renewed lockdowns measures in affected countries and causes disruption to production and logistics.