The Drewry All Earnings Index, which covers the main bulk shipping markets, fell 25% in September to stand at 115 points, according to the Shipping Insight report published by shipping consultancy Drewry.

This followed a similar fall in the index’s value in August, caused by another month of declining earnings by tanker and LPG owners. But the slump in the index would have been much greater were it not for a continued recovery in the dry bulk market, where rates reached new highs in September.

The fall in earnings through both August and September followed a month in which the index had soared 46%, indicating the volatile state of the shipping market (see graph below). The index is an average of time charter earnings for dry bulk, tankers and LPG markets, weighted according to estimated market share.

Despite an increase in spot chartering for tanker vessels, freight rates for dirty tankers declined because of receding demand for crude. But rates for product tankers increased on major routes.

“We expect the tanker market to remain subdued through early October due to maintenance shut-downs of refineries in Europe,” said Drewry’s lead energy shipping analyst Rahul Sharan. “However, the market will recover later in the month as demand for crude rises with better refinery runs on approaching winter.”

In the LPG sector, Asian economies continued to have healthy LPG stocks, resulting in lacklustre shipping demand. Meanwhile, freight rates for chemical tankers were stable in September, as US exports to both China and Europe remained flat.

Sharan elaborated: “We do not expect much near term improvement in the chemical tankers trade. For instance, Europe’s styrene imports from the US are unlikely to grow significantly in the coming weeks.”

The dry bulk market was boosted by a surge in Indian coal imports, as well as seasonal growth in US grain exports, the latter supporting employment of Supramax and Handysize vessels. However, a decline in demand for thermal coal from China has severely dented the demand for larger vessels.

Drewry’s All Earnings Index reached a four-year high of 310 points in December 2013 on the back of a strong recovery in time charter rates across all sectors but has since weakened. September’s reading represented a 12% year-on-year decline and took the index below its 3-year average for the first time since May 2014.