Along the way, market optimism pushed aside waves of doubts as the ‘main engine’ of freight rates roared into life. And let’s hope there are no speed bumps to stop the freight rate charge towards a promising year.
During the week, the Baltic Dry Index (BDI) snapped back to 952 points from the sub-900 level last week, partly influenced by a rally pre-Lunar New Year of restocking.
Meanwhile, the iron ore market being true to its daredevil status, had once again baffled market expectation and went passed $80 per mt mark. The commodity had traded in the range of $81-83 per mt for days in defiance to many banks’ prediction of lower asset prices.
But iron ore was not alone in the rally, its steel-making partner, coking coal has also garnered much Chinese buying interest after prices for seaborne cargoes dropped lower than domestic alternatives.
The low price attracted the attention of many China-based mills to import seaborne coking coal cargoes either for replenish inventory or for speculating trading, boosting tonne-miles in return.
“Right from the start there was a positive feel around the market as the larger sizes got off to a flying start,” commented an FIS FFA broker. He also observed that this positivity had extended to the stability of freight rates in smaller vessel sizes in the supramax market.
“Supramax physical seems to be steady now, finding balance in the Atlantic and possibly seeing signs of better demand.”
As such, capesize rates enjoyed a good run of incremental gains during the week before peaking at $12,512 on Wednesday, up 14% as compared to the start of week rates at $11,002. supramax rates however traded at $6,446 by Wednesday, relatively similar to its starting position of $6,550 on Monday.
So it seems that freight rates are doing well in the game of catch-up if not making great strides yet. There is some way to go to achieve its former zenith of 11,793 points but at least there is a steady crawl toward last year’s peak – so until then, the freight markets will play up, play up and play the game.
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