Capesize freight rates rose on firmer physical Atlantic basin, while the Pacific basin remained soft due to market uncertainty at the aftermath of cyclone.
The Capesize 5 time charter average then rebounded from losses to gain by $607 day-on-day to $24,148 on Tuesday, after a choppy trading session.
The Baltic Dry Index (BDI) followed the rally and rose by 1.49% day-on-day or 26 points to 1,766 readings.
Mixed physical market movements amid cyclone concerns
Capesize freight rates moved in mixed directions with a firmer Atlantic market, while the Pacific market remained weak, as trade participants were trying to assess the impact of the Cyclone Kimi.
So far, the Cyclone Kimi had been downgraded to tropical low, but the heavy rains may result in flooding at eastern Australian coastal areas and disrupted logistics and coal production.
In the meantime, there was a tropical low developing off western Australia named Cyclone Lucas, which might threaten the iron ore terminal at Port Hedland and move inland toward the iron ore producing region of Pilbara.
Meanwhile, there was more cargoes demand in the Atlantic basin amid the thinner ballaster list, providing more supports to key routes like the Brazil to China route.
Despite the bullish sentiments, there was some standoff between shipowners and charterers that resulted in a wider pricing gap.
Bunker prices rise on bullish crude outlook
Bunker prices rebounded on firmer crude oil outlook, as the price of VLSFO rose by $3/mt to $452/mt at the port of Singapore.
Some market participants were bullish about the upcoming Biden administration which might introduce more government stimulus measures to kickstart the coronavirus-hit US economy.
However, the International Energy Agency (IEA) was more pessimistic on the oil demand outlook for 2021, in view of the prolonged lockdowns and slow rollout of coronavirus vaccines.
Thus, the agency predicted a demand recovery only in the second half of 2021 with an annual average of 96.6 million barrels per day (bpd).