The market for capesize bulkers has posted a second consecutive week of significant gains as China’s construction industry slowly gets going again, but iron ore demand is still below historical norms, analysts say.

The Baltic Exchange’s Capesize 5TC of spot-rate averages across five ket routes soared 45.2% over the last week to $18,293 per day on Friday, marking the highest point in nearly two months.

During the prior week, the 5TC skyrocketed 128% to $12,599 per day on 16 September.

“Yesterday, the World Steel Association noted that August global crude steel production declined 4% as compared to last year; China however saw a slight 0.8% bump, its first positive month since June 2021,” Shipfix senior economist Ulf Bergman wrote in a report on Friday

“During the first seven months of 2022, Chinese steel output was down 6% relative to the same period in 2021”, he said.

But global steel output, excluding China, slid 9.3% for August, in line with declines seen during the previous two months.

Regardless, capesize freight rates “have staged a remarkable recovery since the beginning of September, following an abysmal three months”, Bergman said.

“Still, despite the rapid rebound, daily freight rates remain well below what has been observed during the same period in recent years,” he said.

“Hence, if history provides any guidance, there could be an additional upside, but rising economic and geopolitical headwinds could derail such assumptions.”

For example, the average freight rate for the C3 voyage from Tubarao, Brazil to Qingdao, China rose 31% from 30 August to 23.177 per tonne on Friday.

But, the average freight rate was $38.41 per tonne a year earlier on 23 September 2021.

Clarksons Securities analyst Frode Morkedal noticed that Friday’s fourth-quarter contracts were up 3% year over year after gaining 2.8% to $23.717 per tonne on Friday.

“According to Reuters, steel rebar prices have reached a one-week high, and iron ore is on track for its third straight weekly gain due to increased activity in China’s construction sector and pre-holiday demand,” he wrote in a note on Friday.

“Golden Week starts 1 October,” he pointed out.