An interest rate and reserve requirement ratio cut in China is good news for the dry bulk freight market that has enjoyed recovery from all-time low levels - but that recovery is unlikely to be sustained, according to shipping analysts.

The People's Bank of China (PBoC) cut its one year lending rate by 25 basis points to 4.85% over the weekend after share prices in Shanghai dived on Friday, the Financial Times reported. "Banks whose lending to the agricultural sector and small businesses meet the regulators' target will see their reserve requirement ratio slashed by 50 basis points," the South China Morning Post added.

According to Erik Nikolai Stavseth and Kurt Waldeland, shipping analysts at Arctic in Oslo, while the overall market is likely to be more focused on the "tumultuous events" being played out in Europe, the PBoC's move to cut both interest rates and reserve ratios will be positive for dry bulk.

"According to estimates, the combined effect of interest rates and reserve ratios will release some $76 billion into the market. The effect was 'immediate' on copper and we argue that lower interest rates should have a positive effect on steel demand," they said in a daily market report.

Iron ore stocks have fallen over the past months to a current 75 million tonnes, the lowest level since November 2013. This was after stocks had troughed out at 67 million to 68 million tonnes and in the midst of a restocking cycle that lifted the Capesize market, the two analysts said.

"We remain firm in our view that a restocking cycle will play out and that it could give material support to freight rates (a fancy way of saying that we would not be surprised to see Capesize rates surging above $20,000/day). However, we stress that it is likely to be a trading rally, not a fundamental improvement in the overall dry bulk supply/demand balance," they concluded.

Jacob Pedersen, senior analyst at Sydbank in Denmark, said in a market report on Friday - before news of the Chinese interest rate cut had broken - that great uncertainty remained about the sustainability of the freight rate increases seen in June.

"We expect lower freight rates this year compared with 2014. The orderbook for new dry bulkers is steadily at a manageable level and demolition sales of old ships has accelerated due to the crisis," he said, highlighting that the future direction of the demand side would play a crucial role to the direction in freight rates.