As big mining companies are set to book record profits the shipping companies that deliver the precious raw materials are plagued with the lowest freight rates since 2002.
Average leasing costs for capesizes, the 1,000-foot-long ships hauling iron ore and coal, will drop 34% to $22,000 a day this year, according to a Bloomberg News survey of eight fund managers and analysts.
When prices last plummeted that low, China's economy, the biggest consumer of the minerals used in steel and power, was 75% smaller and the benchmark Standard & Poor's GSCI commodity index stood 67% lower, Bloomberg reported.
This time, the problem isn't a potential economic meltdown, which caused shipping prices to tank in 2008-2009, but a glut of new capacity coming to the world's shipping lanes.
About 200 capesizes, spanning some 35 miles end-to-end, will leave shipyards this year, expanding the fleet by 18%, the Bloomberg survey showed.
While Clarksons PLC, the world's biggest shipbroker, expects seaborne trade in iron ore and coal cargoes to surpass 2 billion metric tons for the first time this year, the 7% increase won't be enough to overcome the glut.