Baltic index dips on lower capesize, panamax rates
The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Monday, as sluggish activity continued to pull down panamax and capesize vessel rates, Reuters reports.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, fell 10 points or 1.29 percent to 764 points.
"Abysmally weak demand coupled with low cargo enquires and oversupplied tonnage is seeing all dry bulk segments reeling under tremendous pressure," RS Platou Markets analyst Rahul Kapoor said in a note to clients.
The Baltic's panamax index dipped 10 points or 1.23 percent to 804 points.
Earnings for panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have fallen more than 51 percent this year.
The Baltic's capesize index slipped 11 points or 0.94 percent to 1,158 points. Capesizes typically transport 150,000 tonne cargoes such as iron ore and coal.
"Iron ore majors continued to fix spot in the Capesize segment but had plenty of ships to choose from and rates only drifted lower," Kapoor said.
Sellers of foreign iron ore cargoes to China slashed prices further on Monday as the benchmark rate dropped to its lowest in more than 2-1/2 years, with losses likely to deepen as weak steel demand forces mills to cut output.
Shipments of iron ore account for about a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Average daily earnings for handysize ships were down $116 to $7,583, while those for supramax ships were down $94 to $9,170.
Growing ship supply has been outpacing commodity demand for some time and is widely expected to weigh on dry bulk freight rates in the coming months.
"We maintain a cautious view on the dry bulk market and while we see downside as limited, a meaningful upside does not seem to be on the cards near-term," Arctic Securities analyst Erik Nikolai Stavseth said.
The overall index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, has fallen about 56 percent this year.