Dry-bulk shipping rates rose after two days of decline as demand to move coal and iron ore on bigger vessels resumed.

The Baltic Dry Index, an overall measure of commodity- shipping costs on different routes and ship sizes, added 0.07 percent to 10,732 yesterday, according to the London-based Baltic Exchange. The measure, which reached a record 10,756 on Oct. 15, has more than doubled in the past year.

``Some small volatility is to be expected while this market is so highly strung but the general short-term trend is up,'' Stuart Frost, a Singapore-based broker at Norway's Lorentzen & Stemoco, said in an e-mail response to queries. Port congestion and demand for iron ore by China before an expected price increase in 2008 are boosting rates, Frost said.

Iron ore supplies are lagging behind demand from China's mills, Xu Lejiang, chairman at Baosteel Group Corp., China's biggest steelmaker, said today. Mining companies including BHP Billiton Ltd., the world's largest, begin annual contract talks with customers this month on the price of ore shipments starting April. China overtook Japan as the largest buyer of iron ore, the main steel-making ingredient, in 2003.

Cia. Vale do Rio Doce, Rio Tinto Group and BHP Billiton, the world's three largest iron-ore exporters, may raise prices by 30 percent next year, according to the median forecast of eight analysts surveyed by Bloomberg.

Hiring a capesize, the largest type of dry-bulk vessel, rose after three days of decline, costing $181,157 on average, up 0.2 percent yesterday. A capesize can carry as much as 175,000 tons of cargo.

Newcastle Delays

At Australia's Newcastle, the world's largest coal-export harbor, 43 vessels waited to load as of Oct. 15 compared with 45 a week earlier, Newcastle Port Corp. said. The coal carriers waited an average of 20 days to load, compared with eight hours for general cargo.

About 12 percent to 13 percent of the existing dry-bulk fleet is tied up in congested ports worldwide, according to Oslo-based Nicolai Hansteen, an analyst at Lorentzen & Stemoco.

Freight rates have also been pressured by the rising demand for coal especially after China's shift to a net coal importer earlier this year, Rory Simington, senior coal analyst at AME Mineral Economics said by phone from Sydney. AME Mineral provides market and technical analysis on the metal and mineral industries.

Vessels have to travel longer distances as countries like South Korea look farther afield such as South Africa for replacements to Chinese coal, Simington said.

China, the world's biggest user and producer of coal, will export less of the fuel and import more over the next two years, according to industry-research company McCloskey Group Ltd.

Coal exports will fall by 15 million tons this year to 46.5 million tons and drop further to 42 million tons in 2009, Petersfield, England-based McCloskey said yesterday in a report to clients. Imports are expected to grow an average of 7.2 percent annually over that period, it said.