Capesize freight rates maintained bullish momentum with strong showings in both basins, amid tightening tonnage supply.
The Capesize 5 time charter average, then rose by $2,370 day-on-day to $49,731 on Friday, extending the bullish run.
The Baltic Dry Index (BDI) also continued its record-breaking upward movement reaching high levels of $4,092, up 2.92% day-on-day, due to the freight rally.
Red-hot Atlantic demand extends rally
The Atlantic basin once again set the pace for the rally, with Brazil’s Vale taking many vessels at higher rates that thinned the already slim ballast list.
So far, Vale and several operators had fixed over 15 ships since late August, mostly for the key Brazil to China route for September laycan.
Some trade participants expected this bullish momentum to continue as Vale tried to catch up with its low iron ore shipments during the first half of the year, while other were skeptical and highlighted the declining iron ore prices might cause a slowdown in exports.
Meanwhile, the shipping demand was also gotten heated up in the Pacific basin with healthy cargo list, amid tighter tonnage supply.
Low bunker prices fail to support the freight rally
The bunker prices declined further and provided little support to the freight rally, as the price of VLSFO plunged down by $12.50/mt day-on-day to $493.50/mt in the port of Singapore.
The weak crude market was the main driver for recent bunker price correction, due to market fear over the impact of high Covid Delta infections on global oil demand.
As new lockdowns were issued across Asia and Australia, which added more woes for oil demand recovery, while the US summer driving season was coming to an end that might lead to lacklustre oil demand in near term.