Reuters reported that the index which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertilizer rose 6.06% or 183 points to 3,203 points in a third session of gains.

China smaller steel mills are buying iron ore at the quarterly prices agreed by Japan and South Korea, braving the wrath of the country steel authority and killing any hope of survival for the old benchmark system.

Brokers said high congestion at Brazilian ports had also helped drive rates higher, especially for the larger capesize ships. They added that freight derivatives contract buying had added to the positive momentum.

Commodore Research said "Approximately 60 vessels are anchored off Brazilian iron ore ports, an amount not seen since September 2008. The majority of these vessels are capes. It said such a sharp day on day rise in freight rates was not uncommon in the dry bulk market.”

It added that "When charterers need a vessel, they will pay up to ensure they can move their cargo. In the immediate short term, Chinese iron ore demand is expected to remain firm and congestion will likely take time to ease."

The Baltic main index has been erratic this year, as in 2009 because of swings in Chinese demand for iron ore, the primary ingredient of steel.

(Sourced from Reuters)