Capesize freight rates rebounded from losses as some market participants expected the market to bottom out from recent slump in view of better post-holidays shipping demand.
The Capesize 5 time charter average then rose by $153 day-on-day to $10,457 on Monday, amid thin market activities due to holidays season.
The Baltic Dry Index (BDI) also improved on better freight rates from Panamax and Supramax market that led to a rise of 1.87% or 25 points to 1,364 readings.
High bunker prices, better Panamax and Supramax rates to support freight market
Capesize freight market benefited from the firmer freight rates from Panamax and Supramax freight rates as well as recent rally on bunker prices.
Outside of the supports, Capesize market activities remained thin due to Lunar New Year holidays celebrations that kept out the Chinese trade participants.
However, mining majors like Rio Tinto and FMG were heard to remain active in seeking vessels at the key western Australia to China route to move iron ore cargoes for early March laycan.
Meanwhile, the long lengthy ballaster list continued to affect freight market out of Brazil. However, the market sentiments had improved as some trade sources believed that not all the ballasters passing at the west of Singapore will eventually head toward Brazil.
Firm bunker prices provide support for freight rates
Bunker prices continued to rally on firmer crude prices, as the price of VLSFO rose by $4/mt to $510/mt in the port of Singapore.
The high bunker prices provided some support to freight rates, as Brent crude oil prices rose to a one-year high to $63/mt recently on market optimism for oil demand recovery.
Oil demand also rose in the US due to the winter storm that resulted in more heating demand, while the extreme cold weather caused difficulty for oil productions across the US states.
Due to these factors, some industry sources expect Brent crude oil prices to average around $45-$60 per barrel for 2021.