Baltic Index Near 4-year Low as Virus Mutes Shipping Activity
The Baltic Exchange's main sea freight index edged up from a near four-year low on Tuesday, while the larger capesize segment remained in negative territory, as the coronavirus outbreak in China crippled demand.
The Baltic index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities, rose 7 points, or 1.7%, to 418.
The main index slid to its lowest level since March 2016 in the previous session.
Demand has already been hit strongly in China, which accounts for almost 40% of total dry seaborne imports, Charles Chasty, research analyst at Affinity Shipping, told the Reuters Global Markets Forum.
"We expect the coronavirus, should it last for a while longer, to have a more deteriorating impact on the dry bulk market, owing to China's dominant position within the market."
The coronavirus outbreak in the world's second-largest economy has killed more than 1,000 so far and threatened the country's economic growth.
The capesize index gained 1 point but still stood at negative 253. The index broke a streak of 42 consecutive sessions of falls.
"The sharp drop-off (in capesize segment) can best be attributed to the coronavirus and the new dynamics of IMO 2020, as well as it being a seasonally low period," Chasty said.
The International Maritime Organization (IMO) banned ships from using fuels with sulphur content above 0.5% from Jan. 1.
Average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes including iron ore and coal, rose $172 to $2,760.
The panamax index rose 11 points, or 2%, to 557.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $97 to $5,010.
The supramax index fell 7 points to 477.
(Reporting by Diptendu Lahiri in Bengaluru)