A wave of bankruptcies is expected to hit China’s dry bulk shipowners against the backdrop of record low freight rates and shrinking Chinese demand, according to research house Shanghai International Shipping Institute (SISI).

More than 60% of Chinese dry bulk shipping firms surveyed were struggling with long term losses, while 40% faced liquidity problems, according to SISI, which spoke to 50 of China’s largest dry bulk shipping companies.

“The market is extremely depressed and these conditions are likely to continue in 2016, exacerbating dry bulk firms’ losses, increasing costs and creating obstacles to obtaining financing. This will kick-start a wave of bankruptcies,” SISI stated in a report published on Tuesday.

The Baltic Dry Index (BDI) has been tracking a downward trend since the last quarter of 2015 and sunk to a record low of 467 points on Wednesday.

The SISI report said that more than 60% of the survey respondents did not expect the BDI this year to rise above 800 points, a level last since in October 2015.

In a bid to improve the competitiveness and streamline operation costs of China’s state-owned shipping conglomerates, Beijing recently approved a merger between China Cosco Group and China Shipping Group.

The report also surveyed container shipping, ports and shipping services firms, and gathered that business sentiments across these sectors have also been depressed.