Bloomberg reported that China's largest shipping companies are lobbying the government to foil Vale SA's plan to build a USD 2.3 billion fleet of the world's biggest iron ore carriers that will haul the steelmaking material to the nation.
Mr Zhang Shouguo executive vice chairman of China Shipowners Association said that Vale should engage the shipping companies to run the fleet. Rio de Janeiro based Vale is building 19 of the 400,000 tonnes vessels and will control another 16 under long term contracts, aiming to stabilize freight costs and iron ore prices. He added that "Let the shipping industry do the transport thing. Vale is seeking to control the freight market as it has done with iron ore prices."
The Baltic Dry Index, a measure of commodity transportation costs, slid for a 14th day in London because of a glut of iron ore carriers competing to transport the steelmaking ingredient. Iron ore prices have more than tripled in the past three years and reached a record USD 191.90 a tonne in February.
Mr Murilo Ferreira CEO of Vale Brasil said that the first in the fleet will undoubtedly go to China whenever Vale needs to send iron ore to its biggest customer. The vessel was diverted from its original destination in China to Italy on its maiden voyage because of draft restrictions at the port and a request from a European iron ore customer.
Vale is spending USD 8.1 billion on the fleet including USD 5.8 billion for a 25 year transportation contract with STX Pan Ocean Co, South Korea's biggest bulk shipping company, for seven more. Vale also needs to pay fuel costs for the ships it owns.