The dry bulk spot market may remain in the doldrums over the next few weeks, but bulker futures have been on the rise, pointing to a stronger rebound after the Chinese New Year.

On Tuesday, the Baltic Dry Index, a broad-based measure of the bulker spot market, fell to 946 for the first time in more than two years.

Spot rates for key bulker sectors have continued a steady decline from late December fell further as Asia shuts down manufacturing for the week-long holiday starting on 22 January.

The Baltic Exchange’s Capesize 5TC set of spot-rate averages across five key routes dropped 5.4% on Tuesday to reach $10,300 per day, bringing it to its lowest level since 21 December.

The Supramax 7TC and the Handysize 10C both marked new two-year lows.

The Panamax 5TC, meanwhile, has improved marginally in recent days to $9,699 per day on Tuesday, since sinking to a two-year low of $9,618 on Friday.

“The next couple of weeks should be characterised by the usual slowdown in activity in China, as the early Chinese New Year combined with significant ongoing Covid infections continue to limit the country’s ability to exit the multiyear long slump in economic growth,” Breakwave Advisors, an asset management firm that runs a dry bulk exchange-traded fund, said in a report released on Tuesday.

But forward freight agreements (FFAs) for capesizes, panamaxes, supramaxes and handysizes have shifted into contango, with most contracts for February through may May indicating that expectations for a rebound after the Chinese New Year have strengthened.

“Dry bulk rates tend to rise during the high season of February to May,” Clarksons said in a note on Tuesday.

“It’s not a surprise that demand has been low given the current Covid-19 wave. What matters now is what happens when the country recovers from the outbreak.”

February contracts for capesizes fell 12.1% on Tuesday to come in at $7,946 per day, but they were still above the $6,921 per day recorded on 3 January.

May contracts for this bulker size declined 4.1% on Tuesday to $14,500 per day, but that is stronger than the $11,800 per day recorded two weeks earlier.

March and April contracts also had higher FFA rates on Tuesday compared to two weeks earlier, and most FFAs for panamaxes, supramaxes and handysizes over the next several months also exceeded the start of the year.

“The spot market inadvertently affects future expectations, although in the last week or so freight futures prices have begun to show some much-needed optimism, pushing the curve into a contango and signalling increased enthusiasm about China’s import prospects once the Northern hemisphere exits winter,” Breakwave Advisors said.

Clarksons said that government stimulus to get China’s economy going and higher commodity prices also stand to benefit dry bulk rates after the Chinese New Year.

“As a result, we are optimistic about the dry bulk market in the next months.”