Searchers on two helicopters and four lifeboats were looking for survivors from the bulk carrier Cemfjord, which was carrying cement from Aalborg, Denmark, to Runcorn on England's west coast.
A passing ferry in the Pentland Firth off Scotland spotted the upturned hull of the Cyprus-flagged ship yesterday.
The hull sunk below the water today and the 83-meter (272-feet) vessel was no longer visible, the Maritime and Coastguard Agency said today.
Tony Redding, a spokesman for the German shipping company that operated the vessel, said there had been no distress signal from the ship, and that the last communication with the vessel was routine.
Another cargo ship, a car carrier, ran aground in the Solent between Southampton and the Isle of Wight yesterday.
Officials said 25 crew members were rescued, but the ship remained grounded today, listing at 45 degrees.
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