The market for capesize bulkers swung to new heights this past week as high demand for commodities kept the pressure on a very tight supply of vessels. The capesize 5TC, a spot-rate average weighted across five key routes, improved 15% since last Friday to $61,309 per day on Friday, according to Baltic Exchange data.

The smaller asset classes also saw higher rates over the same period to a lesser degree. The panamax 5TC gained 2.7% to reach $36,104 per day, while the supramax 7TC moved up 1.6% to $36,948 per day. The handysize 5TC edged up 3.4% to come in at $34,650 per day on Friday.

“Honestly, the market is currently in a ‘super-squeeze’ phase,” John Kartsonas, founder of asset-management advisory firm Breakwave Advisors, told TradeWinds. “There is a shortage of tonnage in both the Atlantic and the Pacific trying to serve a steady demand for both iron ore and coal, thus the market balance is considerably tilted towards the benefit of owners.”

He said China’s slowing of steel production should not worry owners because supply and demand are “out of sync” for other reasons such as weather, port congestion and Covid-19 delays. “When and how such a squeeze will resolve is extremely difficult to predict,” he said. Rates will probably start strong next week, but where they will go over the days that follow is hard to say, he said.

“This is a market for strong nerves, and volatility will be considerably higher than in the recent past,” he said. “What matters is the averages, and we are tracking a very strong end of the year no matter what.”

The market may go even higher if port congestion and the supply remains imbalanced between the Atlantic and Pacific basins, but they will not stay very high for too long, Noble Capital Markets analyst Poe Fratt said. “At some point, the transportation costs become too onerous relative to the underlying cost of the cargo, like iron ore,” he said.