The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, hit a fresh six-week low on Thursday.
The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, hit a fresh six-week low on Thursday with a lack of strong interest for cargoes weighing on the market. The index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, fell 2.86 percent or 89 points to 3,018 points on Thursday and was at its lowest since May 26 when it reached 2,942 points. The index hit a more than eight-month high on June 3 of 4,291 but has been erratic since then.
The Baltic's Capesize index .BACI, which tracks costs for vessels typically hauling 150,000 tonne cargoes such as iron ore, fell 5.6 percent on Thursday, also hitting a six-week low.
Chinese demand for iron ore -- the primary material in the manufacture of steel -- has dominated activity with heavy congestion at the country's ports tightening the supply of Capesize vessels and driving freight rate gains but also adding to volatility.
Port congestion off China's coast has eased in recent weeks freeing up Capesize vessels and helping to drag the Baltic index lower.
Overall commodity imports by China are poised to drop from record highs in the first half of 2009.
"There's a complete lack of activity and an absence of interest. It seems as if the summer lull has come early," said a London-based shipbroker.
"At the moment the market looks weak," the broker added.
Brokers said iron ore chartering activity by the world's largest global miners -- Vale, Rio Tinto and BHP Billiton -- remained subdued.
"Much due to an almost complete absence of the three mining majors, the spot market for Capes has lost in excess of 25 percent of its value over the last week," said in a report.
"An easing of Chinese congestion, with a resultant steady flow of prompt units, has further added to rock the balance."
A glut of new vessels is expected to hit the market in the second half of the year and is likely to weigh on freight rates given weak global appetite for commodities and an economic slowdown, analysts said.