Capesize freight rates continued to rally, due to tighter tonnage and port congestion among Chinese ports that extended turnaround time.
The Capesize 5 time charter average, then rose by $3,446 day-on-day to $59,715 on Wednesday, as most of the Chinese trade participants returned to the market from holidays.
The Baltic Dry Index (BDI) then jumped by $150, up 3.40% day-on-day, to $4,560, a 12-year peak from higher freight rates.
Restocking demand gathers pace
Freight rates strengthened as Chinese trade participants replenished stocks ahead of the week-long holidays in October and prepared to restock ahead of the colder winter.
Brazilian and Australian miners were also raising their iron ore production for exports, while demand for coal shipments increased among the Indian trade participants.
However, the port congestion of Chinese ports caused more demurrage costs, as the situation worsened without any improvement in sight, and resulted in some iron ore cargoes to be diverted to other destinations.
Thus, both the Pacific and Atlantic markets remained in backwardation with tighter tonnage supply, especially for early October loading dates.
Bunker prices rise on higher demand
The bunker prices rallied further on firm crude market, as the price of VLSFO rose by $3/mt to $559.50/mt in the port of Singapore.
Market sentiments for crude turned bullish with another draw of US crude stocks as American Petroleum Institute recorded a decline of 6.1 million barrels, exceeding market estimate for a drop of 2.4 million barrel for the week ended on Sep 17.
Some trade participants also expected better demand of crude, due to the current shortage of natural gas, which is estimated to rise the crude demand by 1 million barrels per day.
Thus, Goldman Sachs speculated Brent crude oil prices to hit $90 per barrel in view of rising heating demand for the upcoming cold winter season.