Baltic Dry freight rises as Chinese demand rebounds

* Baltic Dry Index driven by strong Capesize rates
* Coal also supports freight
* Panamax, Supramax yet to rebound

By Henning Gloystein
LONDON, Sept 28 (Reuters) - The Baltic Exchange's main sea freight index .BADI was pushed up on Tuesday, after Chinese demand picked up following the end of last week's holiday, traders said.
The BADI, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, rose 2.16 percent, to 2,504 points, driven mainly by its Capesize component, which rose 7.32 percent to 3,431 points.

Traders said the main reason for this week's rise has been stronger demand in China following the end of last week's mid-autumn lunar calendar holiday.  "The Chinese market, and Capesize in particular, has seen a lot more activity this week, as they are caught between last week's festivities and China's national holiday on October 1, which will see most of the country on vacation next week," one source said.


Other sources said that this had caused increased port congestion, which had pushed the BADI up.
The BADI's recovery started on Monday, after ten consecutive falls that saw the index pushed to its lowest level since the first half of August.
The first signs of recovery appeared late last week, when API2 2011 coal prices rose to their highest levels since August 10. The contract maintained its value since then, trading around $99 metric tonne on Tuesday afternoon.

Sources said that coal traders were taking advantage of the five-week low in freight rates in order to cover themselves for a possible rebound in power prices ahead of the winter heating season. [ID:nLDE68N0VY]
"Coal is one of the most important products carried by freighters so if the increase in coal prices lasts, then we are likely to see an upward correction in freight rates too," one coal trader said.
The Baltic's panamax index .BPNI, however, has yet to show signs of recovery, and instead fell 2.47 percent, or 66 points, to settle at 2,607 points.
The Supramax index .BASI was also down, shedding nine points and 0.48 percent to 1,852. (Editing by Alison Birrane)