Jan 7 (Reuters) – The Baltic Exchange’s main sea freight index, tracking rates for ships carrying industrial commodities, fell to a record low Thursday on worries over vessel demand from top importer China.
The overall index, which gauges the cost of shipping dry bulk cargoes including iron ore, cement, grain, coal and fertiliser, fell 22 points to 445 points. The near-5 percent drop took the index to its lowest since records began in January 1985.
The dry bulk shipping downturn that began in 2008 after the onset of the financial crisis has worsened significantly in recent months as demand for iron ore and coal has declined in the face of slower economic growth in China.
Analysts also see vessel lay-ups and a higher number of ships dismantled this year if the market does not improve.
“The dry bulk sector will probably have to reduce the new building orderbook and increase ship recycling in 2016 to restore the balance,” Moore Stephens shipping partner Richard Greiner said in a note on Wednesday.
A lay-up is when a ship is taken out of service, with some or all of the crew taken off. In a cold lay-up, a ship is mothballed, with only dehumidifiers to keep it from deteriorating.
The capesize index fell 68 points to 399 points as average daily earnings dropped by $562 to $4,198. Capesizes typically transport 150,000-tonne cargoes such as iron ore and coal.
Rising iron ore supplies from top miners are adding to a glut of the steelmaking raw material, weighing on prices.
The panamax index fell 14 points, a little more than 3 percent, to 450 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $110 to $3,595.
(Reporting By Nallur Sethuraman in Bengaluru; Editing by David Goodman)
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