Baltic index taking a hit due to choppy financial waters

The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, softened early in the week as light business and the wider financial turmoil took their toll on the market. The overall index fell 0.32 percent, or four points, to 1,264 points.

Earlier this month, the index had fallen to its lowest in morethan three months after dropping for 18 consecutive sessions. It has remained erratic and has declined more than 25 per cent this year. With fear gripping financial markets following the downgrade of US dept rating by S&P, it was seen as another concern for the market given the general negative sentiment.

Worries for the health of the world economy signal more pain and even bankruptcies among dry bulk shipowners who are getting rock-bottom rates to carry cargoes like coal and now face a glut of new vessels ordered when times were good. The Baltic's Capesize index fell 0.61 per cent as average daily earnings inched lower to $.10,032 a day. Capesizes typically haul 150,000-tonne cargoes such as iron ore and coal.

The Baltic's Panamax index fell 0.14 per cent, with average daily earnings for Panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or gains, reaching $.11,785. Brokers said they were watching for further developments in China, facing its worst power shortages in years, which is likely to have an impact dry freight activity.