Capesize freight rates rose on bullish market outlook, with firm physical market supported by slight uptick in bunker prices.
The Capesize 5 time charter average then rose by $2,065 day-on-day to $25,976 on Monday, as traders hurried to short cover at the start of the week.
The Baltic Dry Index (BDI) also hiked up on better shipping outlook and went up by 2.88% or 60 points to 2,145 readings.
Busy Q2 for iron ore shipments
Market sentiments remained bullish as miners were expected to ship more iron ore during Q2 amid better weather and timed the peak construction season in China.
Thus, the Pacific market saw much market enquiries for vessels with end-April and early May laycan, sought after by miners and ship operators.
Likewise, the Atlantic market also drew much market attention for April loading out of Brazil, due to the improved weather conditions, while the ballaster list remained thin during the period.
Thus, the freight price indicated on the Brazil to China route was heard in the range of $23/wmt to high-$23s/wmt, amid a significant standoff.
Rising bunker prices to support freight rates
Bunker prices provided some support to the higher freight rates, as the price of VLSFO rose by $5.50/mt to $485.50/mt in the port of Singapore.
Global oil demand was backed by market optimism over faster vaccination rates recorded in the US and Europe, while the International Monetary Fund (IMF) revised better growth forecast for the Middle East and North Africa regions.
Crude oil prices also rose due to Houthi’s drone attacks on Saudi Aramco’s oil facilities, while some market experts estimated that global oil demand is backed to around 95% of the pre-pandemic levels.