Capesize spot rates have returned to the highest levels seen in nine years, having risen by 27% over the past three weeks.
The Baltic Capesize Index today reached 4,659 points, its highest level since 17 May 2010.
A further $1,518 was added to the weighted timecharter average for the Baltic Exchange's five capesize routes (5TC) today.
The 5TC benchmark was assessed at $36,101 per day today, up from $34,583 per day on Friday.
These levels exceed the previous high seen on 22 July this year, when 5TC rates peaked at $32,963 per day.
The 5TC rate has increased by 27% since 21 August, according to Baltic Exchange data.
East vs West
The bull run is being fuelled by the same factors that spurred it to record highs in July.
Cargo supply — particularly iron ore from Brazil — continues to outstrip the list of available capesize tonnage in the Atlantic.
"Over this past week, signals had been apparent that the Atlantic was coming to the boil as healthy demand struggled to find tonnage," the Baltic Exchange said in its market report on Friday.
Joakim Hannisdahl, head of research at Cleaves Securities, said in a note today that the firm sees "rates potentially reaching $50,000 per day over the next few months to mark a new nine-year high".
"The primary driver is a normalisation of Brazilian iron ore exports, up from the 18-million-tonne low in April to 34 million tonnes in July, which is similar to our forecast for the remainder of the year."
Rates on the Baltic's Brazil-China (C3) benchmark rose by almost $2 on Friday and today grew by a further $0.614 to reach $28.732 per tonne.
This exceeds the five-year high of $27.518 per tonne seen on 19 July.
Likewise, rates for trans-Atlantic round-trips continue to trade at around a $8,000 premium to those for round-voyages across the Pacific, where vessel supply is greater.
Today, the Baltic added a further $2,225 to its assessment for trans-Atlantic round-trips from Gibraltar-Hamburg (C8_14), which was assessed at $39,725 per day.
In comparison, trans-Pacific round-trips from China-Japan (C10_14) were assessed at $31,688 daily, up by $1,500 since Friday.
Paper market
Sentiment remains bullish for the moment, some of which has translated to the paper market.
However, the Baltic's forward freight curve still points to a bearish trend in rates for the rest of 2019.
"Surging capesize earnings... reflect strong momentum in the physical shipping market, with the forward market following suit trading heavily up on both Friday and this morning," analysts for Clarksons Platou said in a research note this morning.
On Friday, the Baltic's forward assessment for September 5TC contracts rose to $32,058 per day, up by by $2,158 since Thursday but still slightly behind the physical market.
October 5TC contracts rose by $1,562 to reach $28,708 per day.
Contracts for the fourth quarter also rose, but are still lower than those seen for the third quarter.
Q4 contracts were assessed $26,553 per day, up by $1,243 since the previous assessment on Thursday.
