Feb 27 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose on Monday for the third straight day as rates for large capesize vessels stayed firm on strength in iron ore activity.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, rose 12 points or 1.67 percent to 730 points.
Capesizes, which typically transport 150,000 tonne cargoes, saw average daily earnings up at $5,921. Earnings are however down 78 percent this year.
"Expectation is that the capesize rates should gradually come up as there is more activity in the markets," RS Platou Markets analyst Frode Morkedal said.
Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
China steel futures rose the most in nearly six weeks on Monday, spurred by hopes demand in the world's No. 1 steel consumer and producer would bounce back next month and boost appetite for raw material iron ore.
"In China there are mixed signals on the direction of the steel market as stockpiles are declining and traders have taken the recent RRR cut positively," Arctic Securities analyst Erik Nikolai Stavseth said in a note.
"On the other hand, steel mills have yet to lift prices and are likely running at break-even (at best) these days."
The main index, based on daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels is down 58 percent this year.
The Baltic's panamax index fell 0.36 percent, with daily earnings for panamaxes down at $6,683.
Panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have suffered a 49 percent drop in earnings this year.
Prospects for grain crops in major exporters Brazil and Argentina have suffered due to prolonged La Nina weather conditions that have also parched grain producing areas, raising concerns of global food shortages and rising grain prices.