Capesize bulker rates leapt for the second straight day on Wednesday, reaching their highest point in five months as China starts erecting buildings again. The Baltic Exchange’s Capesize 5TC jumped 18.3% on Wednesday to nearly $23,200 per day, following an 8.2% leap on Tuesday. The jump came as Clarksons Securities noted on Wednesday that Evergrande, China’s largest property developer, announced it had resumed work on 631 pre-sold and undelivered projects. The investment hank said that is a “sign of hope” for the country’s struggling building sector, which helps drive the country’s demand for shiploads of iron ore. But the unit of UK shipbroker Clarksons also acknowledged the growing number of Covid-19 cases in China that makes long-term outlook on construction uncertain.

“However, as we argue in our sector report published today, China will eventually return to normalcy, which will act as a catalyst for the dry bulk market,” analyst Frode Morkedal wrote in a note. Firmer average spot rates for benchmark routes that bring iron ore to China, however, underpinned a strong correlation between China’s real-estate sector and capesize rates. The rate for the C10 roundtrip voyage from Australia to China skyrocketed 34.4% on Wednesday to about $16,600 per day, while that for the C14 trip from Brazil to China gained 13.1% to land at around $18,400 per day. China’s return to construction and higher steel prices in that country since late November have also boosted spot rates by prompting more iron ore imports, Jefferies analyst Omar Nokta said. “Dry bulk fixture activity has been more plentiful over the past week, primarily in the capesize segment, and spot rates have jumped to their highest levels since July,” he wrote in a note on Wednesday.

The Baltic Exchange has reported several capesize fixtures for iron ore to China this week, including three hires on Wednesday. Australian miner Rio Tinto fixed an unnamed capesize on Wednesday to carry 170,000 tonnes of iron ore at $8.90 per tonne from Dampier, Australia, to Qingdao, China, after it gets loaded from 7 to 9 January. Rio Tinto hired an unnamed capesize on Monday to carry the same quantum of ore on the same route at a lower rate of $8.15 per tonne after loading took place from 2 to 4 January. Nokta also noted that the capesize futures market is looking pretty good for the beginning of 2023 because of the increased imports to China. “While a seasonal dip is expected in early 2023, the January capesize contract has jumped past $13,000 per day today, as compared to the November lows of $6,000 per day,” he said. Tight supply has also boosted the capesize market, according to analysts with the Baltic Exchange. “The upward trends came from all key regions today with tight tonnage seen especially for prompt loading windows,” they wrote on Wednesday.