The cost of shipping coal and iron ore is about to decline as the supply of cargo vessels overwhelms demand.

Japan, China, and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40% by 2010, according to futures contracts traded privately between banks, transportation companies, and hedge funds. The decline would hurt Antwerp-based Compagnie Maritime Belge SA, the world’s largest commodities-shipping line, and Golden Ocean Group Ltd., run by Norwegian billionaire John Fredriksen.

“We’re going to see the largest deliveries to the fleet that’s ever been recorded,” the head of research at Galbraith’s Ltd., the London-based shipbroker, Philip Rogers, 58, said.

Chinese shipyards are building enough carriers to haul 48 million tons in the next five years, equal to 15% of the nation’s annual iron-ore imports, according to Galbraith’s. The new ships are 26% bigger than the merchant fleet produced by America after the bombing of Pearl Harbor in 1941.

Lower costs may benefit China’s Baoshan Iron & Steel Co., Arcelor Mittal of Luxembourg, the world’s biggest steel producer, and other companies that hire ships to carry grains, coal, ore, and similar goods.

Commodity-shipping rates have soared 41% this year, climbing to a record 6,248 points yesterday on the Baltic Exchange, a 263-year-old institution that traces its roots to a London coffee house.

The world’s largest shipbroker, Clarkson Plc, hedge funds M2M Management Ltd., headed by a former chartering executive at BHP Billiton Ltd., and Castalia Fund Management U.K. are already anticipating a drop in costs.

“It has to fall,” a joint managing director at M2M Management in London, Steve Rodley, said. “It’s hard to see rates sustaining where they are today beyond the summer.”

Rates may begin to decline next month, when cargo vessels become available as port officials in Newcastle, Australia, clear one of the worst-ever traffic jams. A revival in iron ore trade between India and China will reduce the length of voyages and free more freighters.

The cost of renting the biggest ships, known as cape-size carriers, climbed 73% in six months to a record $106,366 a day yesterday, enabling owners to pay for a $78 million ship in a little more than two years.

Diana Shipping Inc., which paid a record $110 million for a cape-size carrier in March, agreed to daily rental rates for the ship of $52,000 every day for more than four years from BHP Billiton, the world’s biggest mining company. Diana will earn sales of at least $75 million. BHP Billiton has an option to extend the contract for 13 more months.

Futures contracts, called Forward Freight Agreements, are traded privately and cleared by Imarex NOS ASA in Oslo and LCH Clearnet in London. They signal rates will decline to $42,200 by 2009, the biggest drop since 2001.

A record 74 vessels are stuck off Newcastle, the world’s largest coal port, waiting for congestion at the terminal to clear and a chance to load. The delays began last year after the terminal scrapped a quota system that restricted when shippers could take on cargoes.

The quota was reinstated this month, and delays will start to ease around mid-May, an analyst at Maritime Strategies International Ltd. in London, Vivek Srivastava, said.