The world shrinks for Goldman Sachs as commodity rout snares ships

The collapse in global rates for shipping commodities from the world's mines to mills and utilities will persist until at least 2020 on a glut of vessels and stalling cargo growth, according to Goldman Sachs Group Inc.

The extended slump is set to intensify competition in the iron ore and coal markets, benefiting the biggest, low-cost suppliers, analysts Christian Lelong and Amber Cai wrote in a report. Higher-cost producers may suffer, they said.

The Baltic Dry Index, a measure of shipping commodities including coal, iron and grains, sank to a record in February amid the fleet surplus and slowing demand for cargoes to China. The country's transition from investment to consumption, together with a shift toward cleaner energy, caused a sharp slowdown in the dry-bulk trade, Goldman said. At the same time, shipyards churning out carriers find they are adding unwanted capacity into an oversupplied market, according to the bank.