Thu May 10, 2012
May 10 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, fell on Thursday for a second day as weak Chinese demand weighed on rates for dry bulk vessels.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 10 points or 0.87 percent to 1,146 points.
The Baltic's capesize index lost 0.61 percent to 1,618 points.
Rates for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, were down $85 to $8,769.
"For capesize to move higher from here, demand needs to pick up substantially in both the Atlantic and the Pacific basin, signs of which look distant in the near term as weak Chinese demand continues to weigh," RS Platou Markets analysts said in a note.
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.
Spot iron ore prices in top consumer China slipped on Thursday as a slow recovery in steel demand kept most buyers off the market, with steel prices hovering near levels last seen in February.
China's iron ore imports dropped to a six-month low of 57.69 million tonnes in April, as falling steel prices forced mills to buy more iron ore from old stocks sitting at ports and use more domestic material.
The Baltic's panamax index fell 2.88 percent, with average daily earnings down $325 at $10,774.
Panamax spot rates have been falling on a drop in seasonal South American grain fixtures coupled with oversupply of vessels.
"Panamax average rates continued to decline with rates in the Atlantic leading the average rates lower to $11,000/day," RS Platou analysts said.
Rates for panamax dry bulk carriers on key Asian freight routes are expected to hover near three-week lows over the next week, pressured by an abundance of vessels and limited Chinese activity, ship brokers said on Thursday.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, has fallen about 34 percent this year.
(Reporting by NR Sethuraman in Bangalore; editing by Keiron Henderson)
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