Baltic index falls as capesize slips further
Yesterday the Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, continued to slip on Monday as rates for capsize vessels prolonged their losses, Reuters reports.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, fell 3 points or 0.42 percent to 711 points.
"Overall dry bulk markets see weak demand and high vessel supply and rates barely covering operating costs," RS Platou Markets analyst Frode Morkedal said in a note.
Greek shipper DryShips Inc painted a downbeat outlook for the dry bulk transportation market after it posted a quarterly loss last week.
DryShips' tone on the dry bulk market turned noticeably more negative, due to deterioration in the financing market following Commerzbank's exit from the ship finance market and continued freight rate weakness, Wells Fargo analyst Michael Webber said in a note.
The Baltic's capesize index dipped 8 points or 0.73 percent to 1,087 points, hitting its lowest this year. Earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, was down $96 at $2,683 - close to its all-time low of $2,316 hit in December 2008.
The capesize index has fallen about 90 percent this year.
"Capesize fortunes were still under tremendous pressure amid record low steel rebar prices in China and weak iron ore buying interest, not to mention the oversupply of ships which just keeps growing," analyst Morkedal said.
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.
Chinese steel futures hit a record low on Monday, falling below 3,600 yuan ($570) on festering worries over demand in the world's second-largest economy, with iron ore remaining trapped at a 2-1/2 year trough.
The Baltic's panamax index was up 13 points or 1.61 percent at 819 points.
Earnings for panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have fallen more than 50 percent this year.
Average daily earnings for handysize ships were down $88 to $7,091, while those for supramax ships were down $40 to $8,758.
"Supramaxes and Handysizes are being affected by lower activity also - partly driven by grains," Arctic Securities analyst Erik Nikolai Stavseth said.
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.
The overall index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, has fallen about 59 percent this year.