Recent recovery in dry bulk freight rates may not be sustainable, but it is good for asset values, according to Kurt Waldeland and Erik Nikolai Stavseth, shipping analysts at Arctic in Oslo.

The Capesize market has 'roared' back to life with spot rates quoted at USD9,500/day - up 120% since the start of June, they said. "While we do not see the rate level as particularly attractive, the fact that shipowners are now covering OPEX and a little of the amortisation should be a boost for asset values," they said.

The underlying market is firming on the basis of geographical imbalances - usually lack of tonnage in the Atlantic. "This time our understanding is that increased iron ore exports out of South Africa is keeping ballasters from reaching Atlantic destinations - leaving the market in a much more balanced state."

"However, the firmer rates are releasing supply for vessels having been idling in 'warm lay-up'. As such, we do not see the current uptick as a sustainable recovery, but more a normalisation of the extremely depressed market seen over the past six months."

"Moreover, the fact that we inevitably will see a restocking of iron ore from Chinese buyers should add cargoes to the market - further substantiating an improving utilisation of the dry bulk fleet. Lastly, we note 4Q15 FFAs currently trading at USD13,600/day and although it has come down slightly our take is that the stock market is not pricing in a Capesize market at USD15,000/day for 4Q15. As such, we turn more positive to dry bulk in the near-term," they stated.

Meanwhile, Eirik Haavaldsen and Oystein Dalby, shipping analysts at Pareto in Oslo, also warned against reading too much in the recent recovery in dry bulk freight rates. "In the short term, a restocking of Chinese iron ore and coal inventories should support the demand side."

"At the same time, the current fleet utilisation stands at around 83% to 85%, and we expect idled vessels to re-enter the market and increase the supply side if rates stay above USD7,000 to USD8,000/day. In sum, we expect increased volatility over the summer, but struggle to see big upside to rates in the near term," they said in a weekly market report.