SHIPPING companies are placing their bets on higher freight rates for iron ore by the Chinese New Year on 26 January, according to a key Drewry market watcher.

Such a rate rise "could provide relief to the drybulk trade", suggested Divay Goel, operations chief for Drewry Maritime Services Asia.

The prediction of higher rates was based on resurgent Chinese demand for coal and iron ore, which is forecast to drive up the Baltic Dry Index.

"Any renegotiation of prices in March or April is likely to result in higher iron ore prices," Goel said. "Cautious Chinese steelmills are expected to prop-up their inventories and stockpile iron ore before the increased prices come into effect."

Capesize freight rates were particularly hard hit over the winter, having shed more than half their value since mid-November.

But market participants have indicated that a rebound is imminent, as another round of iron ore stockpiling in China could boost rates for the early part of next year.

The Baltic Dry Index plummeted late last year on the demise of Capesize rates. But shipbrokers have said they expect the index to climb as much as 15% in 2010?s first half, hitting highs of about 4,000 points.

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