Returns for Capesize ships, the biggest carriers of iron ore, fell the most this month amid speculation elevated steel inventories in China are curbing demand to charter vessels.

Daily average returns slid 1.7 percent to $4,904, figures from the London-based Baltic Exchange showed today. The drop was the biggest since Feb. 28 for Capesizes, according to data compiled by Bloomberg. Each of the ships can hold more than 150,000 metric tons of the ore, a steelmaking raw material.

Steel stockpiles at Chinese ports are the highest in almost a year, according to data from Shanghai Steelhome Information, a researcher based in the city. China will probably cut production while inventories remain elevated, potentially “negative” for Capesize rates, according to Jeffrey Landsberg, managing director of Commodore Research & Consultancy in New York.

“High inventories and high crude-steel output so far this year have been met with somewhat lackluster demand,” Erik Nikolai Stavseth, an analyst at Oslo-based investment bank Arctic Securities ASA, said in an e-mailed report today. Iron- ore prices remain “weak,” he said.

Imported ore with 62 percent iron content at the Chinese port of Tianjin dropped 4.4 percent to $132.90 a dry ton today, the lowest since Dec. 18, figures from The Steel Index Ltd. showed. Steel output in China, which buys about 65 percent of all seaborne iron-ore cargoes, was the highest in six months in January, according to the World Steel Association.

The Baltic Dry Index, a broader measure of raw-materials freight rates, rose for a 12th session to 880, exchange data showed. Returns for Panamaxes, the largest vessels to navigate the Panama Canal, had a 27th straight increase to $9,174 a day, staying at the highest since July 20.

Daily earnings for Supramax vessels rose 1.1 percent to $9,547, according to the exchange. Handysizes, the smallest ships tracked by the index, added 0.8 percent to $7,378, remaining at the highest since Aug. 14.

Source: Bloomberg