Capesize freight rates rallied on stronger bunker prices and led by stronger Panamax segment that improved market sentiment.
The Capesize 5 time charter average then rose sharpy by $1,857 day-on-day to $12,314 on Tuesday, due to bullish market sentiment on post-holiday demand.
The Baltic Dry Index (BDI) also hiked up on better freight rates from Panamax market that led to sharp gain of 9.60% or 131 points to 1,495 readings.
Strength of bunker prices and Panamax to push freight rates further
Capesize freight market continued to draw support from the rising bunker prices and firm Panamax segment.
Moreover, the unfavorable weather also drove up rates in the Atlantic market and resulted in higher offers for the key Brazil to China route.
Though, none of these offers were matched by bids to conclude into any fixtures, but the rates remained well supported by FFA.
In contrast, the Pacific market experienced lesser activities as the Chinese participants celebrated holidays, while other participants waited for their return before making market decisions.
Despite the muted activities, major miner, Rio Tinto was heard to fix a vessel for early March laycan for the key western Australia to China route at mid-$6s/wmt.
Firm bunker prices provide support for freight rates
Bunker prices extended bullish run on higher crude prices, as the price of VLSFO rose by $3/mt to $513/mt in the port of Singapore.
With Brent crude prices treading at the $63 per barrel, Goldman Sachs remained bullish on the commodity, due to high oil demand from recovering global economy.
The bank had predicted Brent crude to rise to $65 per barrel by the middle of 2021, which was being brought forward from previous target of reaching $65 per barrel by year-end.
The higher oil prices prediction was also linked to optimistic growth forecast for the US economy, which is estimated to hit a GDP growth of 6.5% for the year.