Shares of bulk shipping companies jumped yesterday on the recent increase in bulk vessel freight rates, which have risen on hopes that iron ore demand from the mainland would continue to shore up the bulk shipping market. But analysts said the gains in freight rates were not sustainable. Shares in Pacific Basin Shipping, the Hong Kong-based bulk shipping operator, surged 13.72 per cent to HK$5.47 on news that the Baltic Dry Index rose to a seven-month high yesterday. The index, which gauges charter rates for bulk vessels, increased 4 per cent to 3,298 points, after gaining 75 per cent this month. China Cosco Holdings, the largest bulk shipping company in the world, closed 12.17 per cent higher at HK$10.60. China Shipping Development, the largest coastal energy shipping company on the mainland, closed at HK$11.46, up 7.51 per cent. Iron ore traders on the mainland have been speculating on the difference between the spot price and the contracted price of iron ore and started restocking in March. The inventory of iron ore at mainland ports has surged to 70 million tonnes, compared with a normal level of 50 million tonnes, a report by Credit Suisse said this week. The average iron ore contract price, which includes transport, signed by South Korean and Japanese steel mills is US$73 per tonne, while the spot price is US$63 per tonne. Mainland steelmakers have not signed ore contracts yet and are pushing for lower prices. A trader could gain nearly US$10 per tonne by restocking in advance, assuming that mainland steel mills end up signing contracts at US$73. Some analysts said the inventory level of iron ore had exceeded real demand over the past few months. Once the condition reverses, there will be a rush to destock iron ore. 'The trader will unlock the profit, and demand for imported iron ore will slump,' a transport analyst said. Once the destocking cycle was triggered, the Baltic Dry Index was likely to trend closer to the cash break-even level of 1,300 to 2,000 in the next two years, the Credit Suisse report said. Global dry-bulk demand is expected to contract 3.4 per cent this year before rebounding 4.2 per cent next year, while new capacity could hit 12 per cent this year and 20 per cent next.