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Slump in activity pushes down Baltic index

World – The Baltic Exchange’€™s main sea freight index, which tracks rates for ships carrying dry commodities, fell on Tuesday for a sixteenth straight day owing to a slump in activity, according to a report from Reuters. The overall index, a gauge of the cost of shipping commodities such as iron ore, lost 18 points or 1.97% to reach 897 points while the Capesize index was down 0.5% at 1194 points. Average daily earnings for Capesizes were down US$ 92 at US$ 4550. Tough conditions in the Pacific have been pushing rates down in the Capesize market, ship broker BRS says in its weekly note.
Chinese steel futures edged higher on Tuesday as investors returned to the market in the cautious hope that output cuts by steel mills would help ease swelling inventories, but gains were capped by expectations that the reduction would be short-lived. China’€™s small and medium-sized steelmakers are stepping up maintenance in an effort to trim production and stem losses following a slump in steel prices. The cuts have buoyed hopes that the supply overhang would soon ease.
Potentially firmer iron ore demand in the fourth quarter of 2012 and mills’€™ output cuts bode well for the dry bulk sector, according to Arctic Securities. Iron ore shipments account for around a third of seaborne volumes on the larger Capesizes, and brokers say price developments remain a key factor for dry freight.
The Baltic Exchange’€™s Panamax index fell 2.77% to 982 points, with average daily earnings down US$ 217 at US$ 7837. The negative momentum from last week continued as cargo volumes were insufficient to keep the market buoyant, notes BRS.

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