The Baltic’s main index has been erratic this year, as it was in 2009, because of swings in Chinese demand for iron ore, the primary ingredient of steel. It reached a 2010 peak of over 4200 points in May.
Brokers said players were waiting to see if China would raise interest rates, which could lead to a pullback in ore imports and shipping activity.
China’s iron ore imports are likely to rise as much as 10 per cent to a record in 2011, a move that should keep prices near multiyear highs, as the top buyer of the steelmaking material lifts steel output, traders and analysts said.
"While we now view the likelihood of further Chinese stimulus as less likely, thus limiting upside in iron ore imports, coal imports will remain high and we expect this trend to continue going forward," Arctic Securities said.
"We expect Chinese iron ore imports to continue being the main driver for the dry bulk market, but underline the downside to demand should China fall short of expectations."
Analysts have said freight rates will be dampened in the coming months by the pace at which new ships are set to enter the market between 2010 and 2012, despite indications of some vessel cancellations and delays.
"Sustained high fleet growth contributes to a market balance that is under increased pressure. We expect the market balance to deteriorate further in Q4/10 and continue lower in 2011 and 2012," Arctic Securities said.
"We expect freight rates to decline in 2011 due to the heavy influx of heavy influx of new vessels expected delivered in H2/2010 combined with decelerating demand growth."