The analyst noted that, although China remains "in the dry bulk driver's seat," increasing demand from Europe and Japan for iron ore and coal "has driven a significant portion of this upside." Heightened activity on trade routes to Europe and Japan, Yagerman said, have compelled owners to put ships to work there, pushing rates higher on the crucial Australia-China and Brazi-China iron ore routes. As for China, the analyst sees steel production and iron-ore run rates continuing at the current pace until the first quarter of next year, "at which point we believe the threat of them backing away from the market becomes markedly higher." He added that average daily rates for capesize ships could approach $100,000, a level not seen since before the financial collapse. That might not be as bold a call as it may seem. Capesize rates for the more expensive Brazil-to-China route recently pushed above $100,000 a day. Yagerman said he chose to single out shares of Genco for an upgrade to buy because of the company's exposure to the spot market, and Euroseas for an upgrade to the same rating because its stock is trading at a 17% discount to its net asset value. He lifted his rating on Eagle's stock to hold. The company had taken on a lot of leverage to build up its fleet, but the ongoing strength in dry-bulk rates "likely limits near term downside." As with many shipping analysts, Yagerman's favorite pick in the sector remains Diana Shipping ( DSX), which he rates a buy.