With about 90 percent of the world's traded goods by volume transported by sea, a rebound in seaborne freight movement could indicate an upturn in the global economy.
The Baltic Exchange's dry index <.BADI>, which gauges the cost of shipping resources including iron ore, coal, and grains, has steadily recovered from a 15-month low in July after Russia announced it would ban wheat exports for the rest of the year due to the country's worst drought in a century.
The median of a poll of shipbrokers and analysts showed the Baltic Dry Index (BDI) would average 3,011 points from October to the end of the year, up 10 percent from Thursday's close of 2,737. The third quarter's average so far is 2,324 points.
The survey showed seven out of 10 shipbrokers and analysts expect the index to rise in the last three months of the year compared with current levels.
The withdrawal of the world's third largest wheat exporter has led big grain buyers Egypt, Morocco and Japan to rely on more distant suppliers, like the United States and Argentina, for their needs.
This has sparked a rise in demand for long haul vessels, especially panamax bulk carriers.
"With the Russia export ban, Egypt has to buy from the U.S. Gulf, and China is also buying from Canada and the western United States," said Hiroyuki Nagashima, managing director of Sanki Kaiun Shipbrokers.
"The longer mileage will support freight rates, driving the overall index." U.S. grain exports are expected to leap to 95.41 million tonnes, up from 82.14 million the previous year, the Agriculture Department said last week.
The index would also find support from the end of India's monsoon season, industry experts said.
Freight traffic was expected to rebound in the Indian Ocean next month with the world's second most populous country increasing its iron ore shipments.
Traders believe India's southern state of Karnataka could soon relax a ban on iron ore exports, imposed in late July to crack down on illegal mining.
Unpredictable Appetite
But bullish sentiment in the freight market will be tempered by an oversupply of unchartered vessels and uncertainty over China's short-term iron ore and coal demand.
"There is no clear sign of Chinese steel demand recovery or of more domestic iron ore production," said Jordan Lee, analyst at STX Pan Ocean. "This volatility in the capesize market will prevent a sharp rise in the index."
China has asked about 30 mills in its steelmaking hub of Hebei province to cut output by up to 70 percent from September, while another 18 were told to close up for a month to improve the country's energy efficiency.
But a senior Chinese government official this week said its forecast for steel output this year remain unchanged at around 620 million to 630 million tonnes.
The index this year has largely followed the peaks and troughs of Chinese demand for iron ore, which represented about 40 percent of seaborne dry bulk trade in 2009.
Freight rates could also come under pressure from a decline in Chinese coal buying, which is predicted to fall sharply in the second half as Beijing looks to cut power consumption by heavy industry.
