The Baltic Exchange's main sea freight index,which tracks rates toship dry commodities, jumped to its highest in nearly eight monthson Wednesday, helped by a surge in iron ore and coal cargo activiyon the larger capesize vessels.
Brokers said a growing ship glut was set to cap dry bulk freight rate gains in the coming months.The overall index rose 5.34 percent or 82 points to 1,619 points, reversing three previous sessions of falls. Prior to the drop, the index had risen for 11 straight sessions, hitting a near seven-month high.
"What's driving it is the continuous shortage of ships in the Atlantic,mainly capes," said Georgi Slavov, head of dry freight and basic resources research with broker ICAP Shipping.
"Secondly there are very strong exports of iron ore and coal out of Brazil,and the Australian coal exports are finally catching up,"he said, referring to weather-related disruption earlier this yearthat hampered Australian exports.
Slavov said Japanese coal imports also were picking up after an earthquake earlier this year hit volumes.
Increased spot cargo volumes across the board bringing the market back to levels not seen since early winter. All routes expected torise further as strong support is also seen from derivatives.
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