(Bloomberg) — For a glimpse at how fast demand for commodities has rebounded in the wake of the coronavirus, look no further than the market for shipping them.

Monday marked the 10th consecutive increase for the Baltic Dry Index, a benchmark measure of commodity hauling costs that has surged to an 11-year high.

“Earlier in the year, people thought this was a short-term spike in the market, but now people see it as more structural and longer term,” said Jan Rindbo, the chief executive officer of D/S Norden A/S, a 150-year-old Danish operator of more than 500 vessels.

Demand for cargoes of raw materials like coal and iron ore has jumped this year, outpacing an expansion of the fleet as economies recover from the ravages of the pandemic. Exacerbating tight vessel supply, Covid-related disruptions have cut how many ships are available, tilting the market further in favor of owners.

The Baltic Dry hit 4,147 points on Monday, the highest since May 2010. Rates for Capesize carriers jumped 2% to $50,708, the strongest market since at least 2014, according to the Baltic Exchange. Forward contracts are pointing to continued bullish expectations.

Seaborne trade in iron ore trade is forecast to climb 4% to 1.56 billion tons this year, the largest annual jump since 2017, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker.

Wider dry bulk trade is expected to rise 4.2% year-on-year in 2021 and by 1.7% in 2022. Fleet growth is likely to lag behind the increase in cargoes, with capacity expanding by 3.3% this year, and 1.4% growth next, the Clarkson data show.

“Things are looking very rosy for the dry bulk space,” said Joergen Lian, equity analyst at DNB Bank ASA. “This has been a recovery in the making since last summer and has accelerated during this year due to the post-Covid global trade recovery.”

Strong Commodities

As long as a strong commodity market backdrop remains, rates are likely to stay firm, according to Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo. The trend will continue during the rest of 2021 as coal imports surge while winter approaches in the Northern Hemisphere, he said.

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The need for raw materials is surging and the peak has yet to be reached, according to Khalid Hashim, managing director of Precious Shipping Pcl. Rates will continue to soar as China’s port congestion reduces the effective supply of vessels, he said in an interview with Bloomberg TV.

China’s hands-on approach to the Covid resurgence has delayed ships due to strict protocols at most ports in the country. Vessels arriving from suspected high-risk areas are being held up, which is shrinking the market’s supply and pushing up rates, Hashim said.

Crews are being tested on board when they arrive at Chinese ports, which can take up to two days. Ships must then wait until a terminal is available, a process slowed down by a Covid-driven reduction in port staff. Smaller vessels are winning cargoes that would otherwise go on container ships that have been hit hardest by the disruption, Hashim added.

“Demand is off the charts,” Hashim said. “So long as China’s GDP growth rate continues to grow, the demand for raw materials will keep expanding.”

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