Baltic sea index drops on low activity
The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Tuesday for a fifth day on a lack of activity in both the Atlantic and Pacific basins.
The overall index, which reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 2 points to 1,130 points.
"The dry bulk index will be on a downward trend until Chinese demand picks up," George Lazaridis of Greek broking firm Intermodal said.
The Baltic's capesize index was up one point to 1,613 points.
Rates for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, were down $2 at $8,593.
After a slight recovery, weak Chinese demand has weighed on rates for the large capesize vessels.
China has destocked iron ore in last couple of months as international iron ore prices gained, RS Platou Markets analysts said in a note.
"Given the declining iron ore inventories, the recent weakness in iron ore prices and upcoming Indian monsoon season, we expect this to turn and Capesize rates to edge higher in coming months," RS Platou analysts said.
Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Shanghai rebar fell to its lowest level in more than five months on Tuesday, stretching its losses into a third straight session on a week Chinese demand.
The Baltic's panamax index fell 1 percent, with average daily earnings down $130 at $10,231. Panamax spot rates have been falling on a drop in seasonal South American grain fixtures coupled with oversupply of vessels.
"Owners appear less willing to reposition their tonnage towards the Pacific due to high tonnage supply there, along with softening demand fundamentals in both coal and iron ore markets," ship broker BRS said in its weekly report.
"There appears some scope for further declines across both Atlantic and Pacific basins in the coming week."
Panamaxes rates are unlikely to stage a rebound near term, RS Platou analysts said.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, has fallen about 35 percent this year.