Cape rates have pulled out of a 19-month low as the Chinese New Year kicks off. The average weighted time charter rose to $10,753 per day at the close on the Baltic Exchange on February 1. That is 85% higher than the year’s low on January 26. Any upside will be capped by seasonality, as February is considered the weakest month of the year owing to the lunar new year holidays, according to Breakwave Advisors.

“We believe capesize rates have already seen the lows for this year,” the US-based consultancy said in a note. “That does not necessarily mean a sharp recovery is imminent.” The company expects rates to hover at around current levels for the next several weeks as “seasonality remains a headwind for iron ore trading”, it said, adding that it expects a sharp recovery in spring as healthy rates in the other segments pull up the largest bulkers.

With commodity prices high, there are “many reasons to be optimistic” about the dry bulk market, it said, noting how China’s macroeconomic data has bottomed out, and activity should thus pick up over the next few months. “We anticipate sequential improvements in steel output and better sentiment around the steel-intensive industries, which should flow through the dry bulk markets,” Breakwave said, given easing financing conditions and more economic stimulus.

China’s steel production contracted 3% to 1.03bn tonnes last year, compared with 2020, according to the latest statistics by the World Steel Association. In December, output dropped 6.8% to 86.2 MMT. Global output ended the year 3.6% higher, despite a 3% fall in December.

Meanwhile, Anglo American is anticipating iron ore production at 63-67 MMT this year, up from 63.8 MMT in 2021. Its Kumba operation in South Africa is expected to produce 39-41 MMT, with its Minas-Rio mine in Brazil making up the rest, dependent on the extent of Covid-19 related disruptions, combined with third-party rail and port performance in South Africa. Production guidance for metallurgical coal is pegged at 20-22 MMT this year, compared with 15 MMT in 2021.