Capesize freight rates rebounded into new highs with market optimism of another super cycle in the corner that boosted confidence.
The Capesize 5 time charter average then surged up by $4,638 day-on-day to $33,290 on Wednesday, amid bullish market outlooks.
The Baltic Dry Index (BDI) then rallied by 9.63 % or 238 points to 2,710 readings, due to better freight rates.
Super cycle is here again
Freight rates were supported by strong gains and tight tonnage list in the Atlantic with thinner ballaster list, while mining major like Vale fixed high numbers of vessels in the key Brazil to China route.
Some market sources claimed around 10 vessels being fixed by the Brazilian mining giant for May loading dates that buoyed market talks of another ‘super cycle’.
Other trade participants called for more calm in the market as mining majors normally shipped high volume of iron ore shipments in Q2, due to better weather conditions and tried to catch up from the low shipping volume in Q1 due to rainy and cyclone seasons.
Similarly, the Pacific market saw healthy fixtures in key route of western Australia to China. Going forward, market participants were expecting Rio Tinto to ramp up iron ore production and shipment in Q2, after a lacklustre first quarter that were affected by labour shortage and cyclone weather.
Bunker prices plunge on Covid fears and soft crude prices
Bunker prices slumped on weaker crude prices, as the price of VLSFO dropped by $10.50/mt to $500.50/mt in the port of Singapore.
Crude oil demand recovery had succumbed to resurgence of Covid-19 fears that affected India and some part of Asia and Europe.
Furthermore, the market sentiment was plunged further by the high stockpile of US crude oil and distillates recorded by the American Petroleum Institute (API) during mid-April.
Despite the bearish outlooks, there was some market bright spots as aviation travels had risen by 145% on-year in China during the early April period, while US summer driving season may kickoff another gasoline demand surge in near term.