The Baltic Exchange's main sea freight index hit a five-and-a-half-year high on Monday on the back of strong demand for capesize vessels shipping iron ore.
The Baltic index, which tracks rates for ships ferrying dry bulk commodities, rose 3.4%, or 63 points, to 1,928, its highest since January 2014. The index has tripled since February. The index rose 7.2% last week for a fourth straight week, mainly driven by strong demand for vessels that ship iron ore from Brazil.
A restart of Vale SA's Brucutu mine in Brazil in June, which was shut in early February after a tailings dam burst killing more than 240 people, has prompted increased demand from the country.
The capesize index rose 183 points, or 5.2%, to 3,724 points, its highest since December, 2017. Average daily earnings for capesizes, which typically transport 170,000 tonne-180,000 tonne cargoes such as iron ore and coal, rose $1,190 to $28,579.
China's daily crude steel output rose to record levels in June, according to Reuters calculations, even as anti-pollution restrictions pushed whole-month production slightly lower, official data showed on Monday.
The panamax index rose 47 points, or 2.4%, to 1,992 points, its highest since December 2013. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $383 to $15,919.
Tight spot market for capesize vessels has driven iron ore shippers to book panamax vessels, driving rates higher, analysts said. The supramax index edged 9 points higher to 888 points.
Reporting by Karthika Suresh Namboothiri