The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, hit a fresh four-month low on Tuesday with a slowdown in Chinese demand hurting sentiment.
The index - which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser - fell 3.11 per cent or 72 points to 2,246 points, recording its eighth straight fall and was at its lowest since May 11.
'The story over the last week or two has been that demand for the bigger ships has suffered,' Peter Norfolk, director of consultancy & research at SSY, said. 'There has been an apparent slowdown in China's iron ore import demand and a bit lower coal imports.'
In recent months, Chinese demand for iron ore (the primary material in the manufacture of steel) has dominated freight market activity while also adding to swings on the main index.
China's commodity imports slowed rapidly in August as local demand began to look sated after months of Beijing's largesse.
'It is going to need more stimulus from demand to counter the slide,' Mr Norfolk said, referring to the main index.
Port congestion in China as well as off Australia had previously tied up a large number of Capesize vessels, typically hauling 150,000 tonne cargoes such as iron ore and coal. But queues off China have eased, taking its toll on Capesize rates.
The Baltic's Capesize index dropped 7.19 per cent or 208 points on Tuesday and was at its lowest since May 6.
Average Capesize earnings fell to US$23,762 on Tuesday and are 74 per cent down since their June peak this year.
'With the Capes in particular, the congestion levels are a lot lower off China than they were a couple of months ago,' Mr Norfolk said. 'That has effectively released a lot of ships back into the market.'
The Panamax index of smaller-sized ships fell 1.32 per cent on Tuesday, although brokers said there was still Far Eastern demand for soybeans and grains from the United States, which helped drive gains last week.
'Panamaxes are beginning to feel the pressure as well on increased competition from Capes as well as lighter volumes than last week,' Dahlman Rose & Company said in a note.
The Baltic's Supramax index was up 0.1 per cent, reflecting demand for smaller vessels in the Atlantic area, buoyed by the grains export season in the US.
The main sea freight index hit a more than eight- month high on June 3 of 4,291 but has been erratic since then.
Brokers said while there was a pick-up in appetite for iron ore from European buyers as well as in Japan, without stronger iron ore buying from China it would not be enough to bolster freight rates.
Concerns continue to grow over the rising number of new ships set to hit the market in the coming months despite indications of vessel cancellations and delays, analysts said.
'New vessels are arriving all the time, so the fleet is growing quite steadily,' SSY's Mr Norfolk said.
The index - which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser - fell 3.11 per cent or 72 points to 2,246 points, recording its eighth straight fall and was at its lowest since May 11.
'The story over the last week or two has been that demand for the bigger ships has suffered,' Peter Norfolk, director of consultancy & research at SSY, said. 'There has been an apparent slowdown in China's iron ore import demand and a bit lower coal imports.'
In recent months, Chinese demand for iron ore (the primary material in the manufacture of steel) has dominated freight market activity while also adding to swings on the main index.
China's commodity imports slowed rapidly in August as local demand began to look sated after months of Beijing's largesse.
'It is going to need more stimulus from demand to counter the slide,' Mr Norfolk said, referring to the main index.
Port congestion in China as well as off Australia had previously tied up a large number of Capesize vessels, typically hauling 150,000 tonne cargoes such as iron ore and coal. But queues off China have eased, taking its toll on Capesize rates.
The Baltic's Capesize index dropped 7.19 per cent or 208 points on Tuesday and was at its lowest since May 6.
Average Capesize earnings fell to US$23,762 on Tuesday and are 74 per cent down since their June peak this year.
'With the Capes in particular, the congestion levels are a lot lower off China than they were a couple of months ago,' Mr Norfolk said. 'That has effectively released a lot of ships back into the market.'
The Panamax index of smaller-sized ships fell 1.32 per cent on Tuesday, although brokers said there was still Far Eastern demand for soybeans and grains from the United States, which helped drive gains last week.
'Panamaxes are beginning to feel the pressure as well on increased competition from Capes as well as lighter volumes than last week,' Dahlman Rose & Company said in a note.
The Baltic's Supramax index was up 0.1 per cent, reflecting demand for smaller vessels in the Atlantic area, buoyed by the grains export season in the US.
The main sea freight index hit a more than eight- month high on June 3 of 4,291 but has been erratic since then.
Brokers said while there was a pick-up in appetite for iron ore from European buyers as well as in Japan, without stronger iron ore buying from China it would not be enough to bolster freight rates.
Concerns continue to grow over the rising number of new ships set to hit the market in the coming months despite indications of vessel cancellations and delays, analysts said.
'New vessels are arriving all the time, so the fleet is growing quite steadily,' SSY's Mr Norfolk said.