Capesize freight rates continued to rally on bullish market sentiment of improving demand in the physical market, especially in the Pacific basin.
The Capesize 5 time charter average, then went up by $3,407 day-on-day to $24,039 on Thursday, due to firmer rates in both basins.
The Baltic Dry Index (BDI) also recorded gains of 7.58% or 188 points on-day to 2,669 readings, following a better freight market.
V-Shape recovery for Capesize market
The recent recovery seemed to suggest that Capesize had bottomed up from the previous lows with better shipping fundamentals in both basins.
The Pacific market continued to drive the rally, due to the iron ore shipping demand from major miners for the key western Australia to China route.
In the meantime, the Pacific basin also attracted many interests from Japanese and South Korean tenders that supported higher freight rates.
Despite the good demand, some trade participants believed the market was not out of the woods yet, as the foggy weather situation occurred in North China, causing shipping delays and logistics disruption.
Meanwhile, the Atlantic market seemed to turn the corner with more fixtures volume reported on fronthaul trips and Brazil-to-China trip, which lifted market sentiments.
Bunker prices dip on lower cruise consumption
The bunker prices reversed into losses after recent rebound, as the price of VLSFO dropped by $2.50/mt to $523.50/mt in the port of Singapore.
The decline was due market concerns over the inactivity of cruise industry that was hit hard by the pandemic and resulted in lower consumption of VLSFO.
Thus, it was estimated that VLSFO sales dropped by 30%-50% in Australia as compared to pre-Covid level, according to Platts.
Meanwhile, the firmer crude oil prices might provide some supports to the bunker market, as OPEC expected oil demand to rise further by 5.95 million barrels per day in 2021, up 6.6% on-year, due to gradual global oil recovery.