Capesize rates are sitting on a “powder keg” driven by Chinese iron ore demand according to Commodore Research & Consultancy.

Tuesday saw a $1,094 jump in capesize rates to $17,493 per day as availability of vessels has become scarce, particularly in the Atlantic.

“The Atlantic basin capesize market remains tight and capesize rates are sitting on a metaphorical powder keg, with rates set to increase soon by a very large amount very quickly,” said Jeffrey Landsberg, managing director of Commodore.

Last week saw 30 bulkers, mainly capesizes chartered to ship iron ore cargoes to China, the seventh time the weekly number has hit 30 this year, compared to only four weeks in the whole of 2013, and just two weeks in 2012.

“This year, iron ore production in both Brazil and Australia will be even higher during this September through December, so a great many more weeks will see a very large amount of dry bulk vessels chartered to haul iron ore import cargoes to China.  This is extremely promising for capesize rate prospects,” he said.