The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, rose 2.48 percent, or 59 points, to 2,437 points in a sixth session of gains. "Average capesize rates are just below $30,000/day, with iron ore activity continuing to drive the market. Other vessel classes have benefited from a firmer capesize environment as well, with panamax rates up over 10 percent on the week," Omar Nokta, head of research at Dahlman Rose & Co, said in a report.
"We expect the dry bulk market to remain firmer through September as steel prices and spot iron ore prices continue to rise in China." Brokers said a Russian grain export ban could potentially boost freight rate activity with buyers having to source supplies from other origins including the United States.
The Baltic's capesize index .BACI rose 1.9 percent, with average capesize earnings rising to $29,878 a day staying at its highest since June. Capesizes typically haul 150,000-tonne cargoes such as iron ore and coal. The Baltic's main index has been erratic this year, similar to 2009, because of swings in Chinese demand for iron ore, the primary ingredient of steel.
"Some countries are restocking. There is some demand momentum purely from the inventory cycle as underlying growth trends globally are so weak," said Lombard Street Research economist Melissa Kidd. "The data coming out of China suggests there is a slowdown in the offing and you are really going to feel it in the beginning of next year."
The Baltic's panamax index .BPNI rose 2.91 percent with average daily earnings rising to $22,723. "The panamax market is slowly gaining strength propelled more by the short period market and activity in the forward market rather than fresh requirements and high volumes," broker Fearnleys said in a report.
"Expectations of added tonne miles from Russian drought and grain demand supported the short term enthusiasm." More broadly, industry concerns about the pace of global economic recovery may hit shipping, given that about 90 percent of the world's traded goods by volume are transported by sea. The number of U.S. workers filing new claims for unemployment insurance unexpectedly rose last week to its highest level in close to six months, a fresh signal of a weak jobs market.
Analysts said freight rates also were expected to be dampened this year due to the pace at which new ships are set to enter the market in 2010 and 2011, despite indications of some vessel cancellations and delays. "The pace of demand growth is not going to be enough to overwhelm that increase in (ship) supply," Lombard Street Research's Kidd said.
Source: Reuters
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