Capesize freight rates continued to rise on market optimism, after much support from Brazil’s shipping demand.
The Capesize 5 time charter average then rose by $406 day-on-day to $22,874 on Thursday, despite some correction in the Pacific freight rates.
The Baltic Dry Index (BDI) then faced some corrections after recent rally and went down by 1.83% or 39 points to 2,088 readings.
Fading rally due to overvalued freight market
Market participants had downplayed the recent rally and expected some corrections from the overvalued freight market.
Thus, some of participants expected market to slow down before another rally occurred later around the May and June loading windows.
As such, the Pacific freight rates headed southward despite healthy shipping list, as freight indications on the key west coast Australia to Qingdao route were rangebound around $10.15-$10.30/wmt.
There was much improvement in the Atlantic market with more Brazilian iron ore shipping demand especially for vessels’ fixtures during the first-half May laycan.
Bunker prices gain little to support freight rates
Bunker prices provided little support to freight rates, despite the price of VLSFO gained slightly by $0.50/mt to $480.50/mt in the port of Singapore.
Global oil demand came into doubts on renewed lockdowns that resulted in struggling crude prices as some bearish market participants expected the global oil consumption to return to pre-Covid level by the 2023-2024 period.
Market participants were also concerned about the prospect of reviving the US and Iran nuclear deal, which might lift Iranian oil sanction and flooded the market with more supplies.