Global – The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry commodities, continued to dip on August 20. The index, which factors in the average daily earnings of Capesize, Panamax, Supramax and Handysize dry bulk transport vessels, fell three points or 0.42% 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 has noted. Greek shipper DryShips Inc also provided 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 following Commerzbank’s exit from the ship finance market and continued freight rate weakness, according to Wells Fargo’s analyst Michael Webber.
The Baltic’s Capesize index dipped eight points or 0.73% to a low watermark for this year of 1087 points. Daily earnings for Capesizes, which typically transport 150 000-tonne cargoes, were down US$ 96 at US$ 2683 – close to the all-time low of US$ 2316 recorded in December 2008.
The Capesize index has fallen around 90% 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,’ says Mr Morkedal. Shipments of iron ore account for around a third of seaborne volumes on the larger Capesizes, and brokers say price developments remain a key factor for dry freight.
Chinese steel futures hit a record low on Monday, falling below Yuan 3600 per tonne (US$ 570) on worries over demand in the world’s second-largest economy.
The Baltic’s Panamax index was up 13 points or 1.61% at 819 points. Daily earnings for Panamaxes, which usually transport 60 000- to 70 000-tonne cargoes, have fallen more than 50% this year. Average daily earnings for Handysize ships were down US$ 88 at US$ 7091, while those for Supramax ships fell US$ 40 to US$ 8758.
‘Supramaxes and Handysizes are being affected by lower activity also,’ Arctic Securities’ analyst Erik Nikolai Stavseth has 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 has fallen around 59% this year.
Source: Reuters
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