Shipping lines, including Hong Kong operators, face an uncertain six months as concern about Chinese steel demand and the strength of European economies cloud both the dry bulk and container shipping markets. Operators of large dry bulk cape-size vessels of about 180,000 deadweight tonnes have already seen charter rates slump in the past two months on the main iron ore transport routes from Australia and Brazil to China. Charter rates for iron ore cargoes from Australia to China are just above US$8 per tonne, compared with about US$14 per tonne in early May, shipbrokers said yesterday. This equates to average earnings of US$15,000 per day, which is barely enough to cover daily operating and financing costs, they added. By comparison, rates for a charter from Brazil to China are down to about US$22 per tonne from US$30 at the end of May. Charter rates for smaller vessels of about 70,000 dwt and 35,000 dwt have also fallen. Uncertainty also surrounds prospects for the container shipping sector on Asia-Europe routes amid concerns that austerity measures in some countries and the drop in the euro mean bleak economic outlook. Tiger Group Investments, which is closely linked to the Seaspan Corp shipping group, was pessimistic about prospects. Managing director Julian Proctor said the growth in Asia-Europe container volumes 'was driven by demand for manufactured goods'. He added that while there had been a rebound in container shipment volumes, 'it is not a 15th century renaissance, but a 15-second renaissance', pointing to the economic uncertainties. But Maersk Line vice-president and head of south China Soren Karas was more upbeat and pointed out that there had been a 'very strong market with high demand'. He remained confident and was 'fairly comfortable' about prospects for the third quarter, but was 'slightly more concerned' about the outlook for the fourth quarter. 'The European economies, we would like to see them do slightly better,' Karas said. He added that goods being shipped now were ordered before the debt crisis in Greece. Uncertainty about prospects in the bulk and container shipping markets was likely to affect earnings of Hong Kong-listed companies including China Cosco Holdings and Jinhui Holdings, depending on the level of charter cover. Brokers blamed the fall on a drop in chartering activity by mainland buyers. 'Major Chinese players stayed out of the market for the whole of June and charter rates slumped as a result,' one Hong Kong-based shipbroker said. A Singapore-based shipbroker held out little immediate prospect of an improvement in the outlook until China started buying iron ore again. 'The market is pretty miserable. As things stand, I am not optimistic about the second half of this year,' he said. While iron ore stockpiles at China's major ports have remained robust at 72 million tonnes, equivalent to three months' supply, domestic steel producers have cut prices after record production in May. Figures from the World Steel Association estimate China's crude steel production topped a record 56.1 million tonnes in May, compared with almost 46.5 million tonnes in May last year. But steel prices have continued to fall since early May.