Freight rates for Capesize bulkers in various trades have risen to their highest levels since last October, with continued cargo flows from Brazilian and Australian miners supporting the recent rally in the iron ore price. The bullish momentum can be seen in both the Atlantic and Pacific Basins, where vessel supply was tightening amid continued fixtures of May-loading cargoes, said a Singapore based Capesize broker.

The average weighted time charter on the Baltic Exchange was $28,652 per day at the close on April 20, from $26,055 a week earlier — an increase of 10% and the highest in six months. The Baltic Capesize Index, the industry benchmark, gained 313 points to 3,455 points on April 21.

Breakwave said a continued strong global recovery in steel demand would benefit the dry bulk sector, with iron ore volumes for seaborne transportation remaining strong and supporting freight rates, especially for the larger tonnage.

“Output from the world’s top iron ore producer, Brazil’s Vale, is expected to recover to normal levels during the latter part of the year, following earlier mining accidents, contributing to a higher tonnage demand,” the shipping consultants said in a report.

Recent Chinese customs data have also shown a healthy increase in iron ore imports by the world’s largest steel producer as output picked up, with volumes surging to a five-month high in March. Meanwhile, plenty of tangible short-term factors are currently keeping things tight in the Capesize market, according to Braemar ACM.

One of these is the minimum ballast requirement that is still in place on some trades. Ships must be at sea for 14 days from their last port before they are allowed to call at an Australian port. This has been in place since early last year to limit the spread of coronavirus in the country. “The result has been a sustained increase in time spent ballasting or waiting to load for ships performing C5 trades,” Braemar analyst Nick Ristic said in a note.

“This is the single most important route for the Capesize market, accounting for almost a third of employment last year, so inefficiencies here can have great implications for the wider market.”