Feb 21 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell for a fifth straight day on Tuesday as rates for both capesize and panamax vessels fell.
The overall index that gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 9 points or 1.26 percent to 706 points.
"Dry bulk rates continue to bounce around near the bottom as vessel availability outweighs demand," Deutsche Bank analyst Justin Yagerman said in a report.
Dry bulk freight rates have suffered as a glut of ships have outpaced commodity demand and Yagerman expects the current oversupply to improve only next year.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels is down 59 percent this year.
The Baltic's capesize index fell 0.27 percent as demand for iron ore from top consumer China remained weak.
Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, slid to $5,158, their lowest since March 2 last year. Earnings are down 81 percent this year.
Some analysts expect the move by China to cut banks' reserve requirement ratio for the first time this year to be positive for dry bulk markets.
"While the steel industry has had a modest start to 2012, the RRR cut could act as a catalyst for construction and thus increasing the steel industry's demand for iron ore." Arctic Securities analyst Erik Nikolai Stavseth said.
The Baltic's panamax index dropped 3.33 percent, with average daily earnings for panamaxes falling to $7,198.
Panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, have seen a 45 percent drop in daily earnings this year.