The Baltic Dry Index (BDI) maintained the momentum from last week as the latest data indicates China's steel output is at the highest level since 2014.

The broad index of shipping rates notched a Monday close of 1065, the highest since August 2015.

The day's trading saw reports emerge of Brazil-to-China journeys for capesize bulkers at $12 to $12.25 per tonne, up from $11.75 to $11.95 per tonne late last week.

Average panamax day rates increased 4.6% to $8,440 per day, according to the Baltic Exchange.​

The previous BDI high of more than two years ago was followed by a long slide in the index after data showed China's industrial economy contracting.

But one key component of that industrial economy, steel, appears to be on the road to recovery.

Arctic Securities says October steel output suggested an annual run-rate hitting 809 million tonnes. That is the highest since China's steel output peaked at 813 million tonnes in 2014, as well as being well above the expectations of steel output for this year being less than 780 million tonnes.

The steel output means greater iron ore imports, which have risen 9% this year to 844 million tonnes, according to research from Lorentzen & Stemoco. Iron ore imports could top 1 billion tonnes this year, it added.

Lorentzen & Stemoco head of corporate development Nicolai Hansteen says some of the strength in the market is typically seasonal as China boost imports ahead of the January slowdown for its lunar new year. But he says the overall market appears firmer as iron ore stockpiles in Chinese ports do not appear to be too high.

Charterers such as Vale are also making more queries in the market for capesize vessels and "rates are a reflection of that," Hansteen said.

"If they are in the market, that's going to push up rates," he added.

Increasing protectionism looms for China's steel exports

Much of China's strength in steel production stems from internal demand, driven the country's own stimulus measures. High-rise residential housing and infrastructure spending in the country are up this year. China's internal steel consumption rose 12.5% according to Morgan Stanley.

But China's steel exports took a spill in October and September, declining 12.5% and 22%, respectively from a year earlier levels.The country faces accusations of dumping steel in global markets. The European Union has imposed tariffs that increase Chinese steel import prices by some 12% to 74%.

US president-elect Donald Trump has been vocal in his belief that China is taking advantage of its weak currency to boost its export trade. The potential for future protectionist measures against China's steel exports may stymie further growth in its need for iron and coking coal.

"Without exports, the Chinese steel market would have been highly imbalanced with the sustained high production. We maintain the view that Chinese exports will decline as increased protectionism already started before jitters post-US election added further woes," Arctic said. "As such, the likelihood of lower (steel) production in 2017 seems higher at this point – a factor that will negatively impact dry bulk through lower demand for iron ore."