Freight rates in the dry bulk shipping market have bottomed out and spot rates, especially for larger sized vessels, are expected to increase, according to a research note from DNB Markets.

The bank’s note stated that fundamentals in the dry bulk market look good due largely to the positive conditions in the Chinese steel sector and good performance on iron ore exports from Australia.

“All in all we believe the dry bulk spot rates, in particular for the larger sizes, should increase from here,” DNB Markets said.

“We have a spot rate forecast (full year 2014) of $26,000 a day for capesizes, $15,000 a day for panamaxes and supramaxes and $12,000 a day for handsizes.”

It added that capesize vessels would have a strong fourth quarter of about $35,000 a day.

The research note further pointed out that Chinese iron ore imports of 75-80m tonnes for April and May would imply a rather high utilisation of the capesize fleet, giving a boost to shipping rates.

“Digging deeper in the fundamentals we find several other supportive factors such as a healthy Chinese steel production growth of 6% in March and downward trending steel inventories, though on flattish steel prices,” the bank said.