China Cosco Holdings Co., theworld's largest operator of dry-bulk ships, fell in Shanghaitrading after saying it may lose 3.95 billion yuan ($577million) from wrong-way bets on rates.

The shipping line dropped as much as 9.3 percent to 8.40yuan and traded at 8.50 yuan as of 9:31 a.m. in Shanghai. China Cosco reported the potential losses from forwardfreight agreements after bulk-shipping rates fell as much as 94percent in less than seven months. Rates tumbled as Chinesesteelmakers curbed production and because the credit crunch madeit harder for companies to raise financing for shipments.

The Tianjin-based shipping line's total losses fromderivatives amounted to 5.38 billion yuan in the year to Dec. 12,according to a Hong Kong stock exchange statement yesterday.That was offset by a 1.43 billion yuan gain. The company hadreported a net loss of about 440 million yuan on FFAs at the endof the third quarter.

The loss is ``the biggest one I've ever heard of,'' HermanMichelet, chief executive officer of Oslo-based freight-derivatives broker Imarex ASA, said yesterday. The Baltic Dry Index closed at 803 yesterday, compared withthe May 20 record close of 11,793.

The ``operating environment'' this quarter is ``verytough,'' China Cosco said in its statement. Demand forcontainer-shipping has also fallen and fees along major routeshave ``declined dramatically.'' The company operates China's largest container line.