The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell to its lowest in nearly two years on Friday as the market continued to struggle with an excess of vessels, Businesstimes reports.
The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 4.13 per cent, or 49 points, to 1,137 points and was at its lowest since Feb 2, 2009.
'Weakness in the freight market is set to continue for at least the next few days. A lull in chartering activity is likely to occur during the upcoming week due to Lunar New Year celebrations in Asia,' said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research.
'With less coal and iron ore fixtures likely to come to the market next week, it is unlikely that capesize and panamax rates will find significant near-term support.' Flooding in Australia and weather-related problems in Colombia, South Africa, Russia and Indonesia have all disrupted coal shipments at a time when the dry bulk market is already finding it tough to absorb growing vessel deliveries ordered before economic turmoil in 2008.
Freight rates are likely to fall further as coal buyers say they are holding off booking cargoes due to high prices and thin margins.
The Baltic's capesize index fell 2.49 per cent, with average daily earnings weaker at US$6,177 falling for a twelfth session and at its lowest since Dec 11, 2008. Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal.
'Lack of cargoes and record high iron ore inventory in China gives little hope for a nearby recovery,' PF Bassoe said.
The Baltic's panamax index fell 3.19 per cent, with average daily earnings dropping to US$10,689 in a thirteenth session of falls. Panamax vessels usually transport 60,000-70,000 tonne cargoes of coal and grains.
Brokers said due to disruptions in Asia more panamax vessels were journeying from the Pacific to the Atlantic in search of business.
'With political unrest, oversupply of tonnage and natural disasters, who knows when this will swing around, but with Chinese New Year around the corner we struggle to see an upside in the near future,' Braemar Seascope said referring to panamax prospects.
Brokers said rates for smaller supramax vessels were expected to fare better in the coming weeks as they were able to diversify their cargoes to other commodities such as sugar and grains. The Baltic's supramax index still fell 5.03 per cent.
While there are indications of some vessel cancellations and delays, analysts expect deliveries to gather pace between 2011 and 2012 putting further pressure on rates.
'The looming order book will continue to put a dampener on the dry bulk market in 2011,' Arctic Securities said.
The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 4.13 per cent, or 49 points, to 1,137 points and was at its lowest since Feb 2, 2009.
'Weakness in the freight market is set to continue for at least the next few days. A lull in chartering activity is likely to occur during the upcoming week due to Lunar New Year celebrations in Asia,' said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research.
'With less coal and iron ore fixtures likely to come to the market next week, it is unlikely that capesize and panamax rates will find significant near-term support.' Flooding in Australia and weather-related problems in Colombia, South Africa, Russia and Indonesia have all disrupted coal shipments at a time when the dry bulk market is already finding it tough to absorb growing vessel deliveries ordered before economic turmoil in 2008.
Freight rates are likely to fall further as coal buyers say they are holding off booking cargoes due to high prices and thin margins.
The Baltic's capesize index fell 2.49 per cent, with average daily earnings weaker at US$6,177 falling for a twelfth session and at its lowest since Dec 11, 2008. Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal.
'Lack of cargoes and record high iron ore inventory in China gives little hope for a nearby recovery,' PF Bassoe said.
The Baltic's panamax index fell 3.19 per cent, with average daily earnings dropping to US$10,689 in a thirteenth session of falls. Panamax vessels usually transport 60,000-70,000 tonne cargoes of coal and grains.
Brokers said due to disruptions in Asia more panamax vessels were journeying from the Pacific to the Atlantic in search of business.
'With political unrest, oversupply of tonnage and natural disasters, who knows when this will swing around, but with Chinese New Year around the corner we struggle to see an upside in the near future,' Braemar Seascope said referring to panamax prospects.
Brokers said rates for smaller supramax vessels were expected to fare better in the coming weeks as they were able to diversify their cargoes to other commodities such as sugar and grains. The Baltic's supramax index still fell 5.03 per cent.
While there are indications of some vessel cancellations and delays, analysts expect deliveries to gather pace between 2011 and 2012 putting further pressure on rates.
'The looming order book will continue to put a dampener on the dry bulk market in 2011,' Arctic Securities said.