Financial Times reported that Australia's flooding and fears of ship oversupply has pushed down a gauge of the cost of hiring ships to carry coal, iron ore and other dry bulk by nearly half since October 2010 to the lowest level since the aftermath of the financial crisis. The Baltic Dry index, the widely watched measure of dry bulk charter rates, fell to 1,446, nearly half the 2,784 peak reached on October 27th 2010.

The Baltic Dry index was last so low on February 4th 2009 when the market was still recovering from a collapse during the financial crisis when worries about trade finance led to a near halting of many forms of trade.

Mr Guy Campbell head of dry bulk at Clarkson shipbrokers said that the market was nearing a point where shipowners would prefer to leave their ships unemployed rather than accept rates below their operating costs. He added that "We must be getting close to the bottom."

The market has been reacting to significant deliveries of new ships and sharp falls in the demand to ship cargo, mainly because of weather related disruption to mines and transport systems. The most serious disruption has been the flooding in Queensland, its mines supply about 40% of the coking coal for steelmaking worldwide.

Mr Campbell pointed out that, as well as the Queensland floods, there was weather related disruption to shipping on Canada's St Lawerence Seaway, normally a major market for iron ore movements.

According to London based Simpson, Spence & Young shipbrokers, 241 Capesizes are due for delivery this year, nearly a 25% increase on the current 1,000 strong fleet. The collapse in rates is not affecting all ships. Rates for Panamax and Supramaxes ships are currently higher than for the larger Capesizes.

(Sourced from www.ninemsn.com.au)