NEW YORK (TheStreet) -- Dry bulk shipping rates won't stop sliding.

On Tuesday, the going rate on the spot market for the largest dry-bulk freighters on the high seas, the Capesize vessels too big to fit through the Suez or Panama canals, fell to their lowest point since early 2009, in the midst of the financial collapse.

Meanwhile, dry-bulk equities were mixed Tuesday, with shares of


(DRYS) - Get Report

, which has its own unique

drillships-related issues

, trading below $4, and

Genco Shipping & Trading

(GNK) - Get Report

inching higher by 0.2% in Tuesday morning trading.

Diana Shipping

(DSX) - Get Report

, meanwhile, made good on an earlier promise to create a containerships unit, announcing Monday that it acquired two of these finished-goods carriers for $45.5 million apiece. Diana shares were also slipping 4 cents Tuesday morning to $12.63.

According to the Baltic Exchange, a London shipbroker, the average daily rate for a Capesize ship declined another 7% Tuesday to just above $25,000. For the week, rates have plunged 32%, and a year ago, amid a furious run-up in dry bulk rates on the back of furious Chinese importation of iron ore and other raw materials to fuel its breakneck (and highly stimulated) economy, Capesize rates reached nearly $90,000 a day.

And therein lies the rub. "The China Story," as it's incessantly being called on the financial TV shows, entered a negative chapter months ago, as the nation's monetary and fiscal authorities made moves to tamp down real estate speculation by making it tougher to borrow. This in turn has freaked out commodities investors the world over. A slower-growing China likely means lower commodities prices.

Partly for this reason, steel prices have fallen off in China, and whenever steel prices decline in the People's Republic, so do

dry bulk shipping rates

(which have declined sharply for two weeks in a row). Steelmakers -- heavy users of iron ore -- are in a better position to negotiate shipping rates when their own products are losing value. Though steel rebar prices, for example, have come back a tad in recent days, they're still down 13% from their high of the second quarter.

Some observers believe there's more smoke than fire when it comes to the China slowdown that everyone fears. In May, after all, China set another steel production record, kicking out more than 56 million metric tons of the stuff.

But, experts say, investors should look for China's steel mills to ease back on production -- which will continue to put pressure on dry-bulk freight rates -- for two reasons.

First, the quarterly iron-ore contract price will once again be a point of dispute between China's biggest steel companies and the world's largest iron ore miners (


(VALE) - Get Report


BHP Billiton

(BHP) - Get Report


Rio Tinto

( RTP)). Haggling and dickering will likely ensue, "setting the stage for ... slower

chartering activity," wrote Omar Nokta, the dry-bulk shipping analyst at Dahlman Rose, a small investment bank in New York.

Second, because the miners are pushing for another 20% to 25% price hike, it will likely mean another round of raw materials cost inflation for steel producers. Already stung by weakening prices for their products, steelmakers are faced with squeezing margins. Some Chinese mills have started cutting back on capacity, at least for the short term, in a bid to give support to prices.

Other analysts feel the slide in freight rates will end sooner rather than later. Among those is Jeffrey Landsberg, an independent dry-bulk market analyst. In a recent report, he noted that demand for iron ore on the spot market has remained fairly strong. The number of ships being booked to haul iron ore to China has also not drastically fallen off. He expects dry bulk shipping rates to bottom out by the end of the week.

The Pirates' Toll

High Stakes on the High Seas

-- Written by Scott Eden in New York


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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.