Baltic index drops from seven-month high as Capesize rates fall

The Baltic Exchange's dry bulk sea freight index dipped on Tuesday due to a decline in capesize rates, after scaling a seven-month high in the previous session.

The main index lost 11 points, or 0.6 per cent, to 1,680. The index hit its highest since November 18 on Monday.

The Capesize index was down 54 points, or 1.8 per cent, at 2,956. Average daily earnings for Capesize vessels fell $442 to $24,519.

"We note that the China iron ore import price arbitrage has widened recently with domestic iron ore priced at a $7/ton premium to landed prices from the international markets, which is likely playing a key role in boosting iron ore import demand into China," Jefferies analysts said in a note.

Iron ore futures extended their decline into a second straight session, dragged by expectations of growing supply, although resilient demand from top consumer China and hopes of easing Sino-US trade tensions curbed losses.

Top officials from the US and China sought to defuse a bitter dispute that has widened from tariffs to restrictions over rare earths, with trade talks extending to a second day in London.

The Panamax index firmed 36 points, or 2.9 per cent, to 1,300, a four-week high. Average daily earnings for Panamax vessels were up $320 at $11,698.

Among smaller vessels, the supramax index was down seven points at 919, a near three-month low.

(Reporting by Ishaan Arora in Bengaluru; Editing by Shreya Biswas)