Cyclone Hamish now category two

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A stroke of luck likened to

A stroke of luck likened to "winning the lotto 100 times over" saved the life of fisherman James Palmer, when a wave washed back an emergency beacon that he'd lost grip of earlier. (AAP)

Tropical Cyclone Hamish has been downgraded to a category two cyclone.

Tropical Cyclone Hamish has been downgraded to a category two cyclone.

Currently located about 195km east of Sandy Cape and 250km northeast of Double Island Point, Hamish is moving slowly and is expected to continue to weaken.

The Bureau of Meteorology said a large high pressure system over the western Tasman Sea in combination with Hamish is producing strong to gale force winds and large waves around the southeast Queensland coast.

The cyclone spent Tuesday slowly spinning away from the central Queensland coastline and is expected to turn to the northwest later on Wednesday.

Search for missing men continues

Meanwhile, eight aircraft are continuing the search for two missing fishermen whose trawler was battered by the cyclone off the central Queensland coast.

A stroke of luck likened to "winning the lotto 100 times over" saved the life of fisherman James Palmer, when a wave washed back an emergency beacon that he'd lost grip of earlier.

However, hopes are fading for his uncle Russell Palmer - the boat's skipper - and another experienced fisherman Tony Tyndall, who have been lost at sea for almost 48 hours.

Australian Maritime Safety Authority (AMSA) spokeswoman Tracey Jiggins said the search resumed at first light on Wednesday morning.

Seven fixed wing aircraft are searching the waters for the two men, while a high altitude Dornier aircraft will relay messages to the communications centre in Canberra, she said.

"All the crews have been briefed this morning, there will be a minimum of two SES observers on each aircraft," Ms Jiggins said.

"There's always hope and we're putting in as many resources as we can today, because time is of the essence."

The search will take place over 1,120 square nautical miles, about 140 nautical miles northeast of Rockhampton.

An AMSA Dornier aircraft searched the waters overnight using an infra-red body heat detecting device, but was unsuccessful in locating the two men.

The trawler, named MBC, was located on Tuesday afternoon by an AMSA aircraft about 210km off the coast of Yeppoon, close to where an emergency beacon went off on Monday morning.

But a rescue crewman lowered to the boat found no one on board.

The trawler is believed to have been lashed by waves of up to six metres and heavy winds early Monday morning.

However, a search of the trawler has lifted hopes for the two men.

"We understand there is another life raft that hasn't been recovered from the trawler," Ms Jiggins said.

On Wednesday, there were expected to be high winds, but not too extreme, with choppy water.

The search will continue until nightfall, when a decision on whether to carry on will be made.

Medical survival expert Dr Jeff Brock has said that if the men had been knocked overboard without flotation devices, they would face a tough battle to stay afloat and not take in water.