Google Website Translator Gadget

Tuesday, December 13, 2011

Only time will tell if Vale's giant ore carriers will enter China

Tuesday, 13 December 2011

Brazilian iron ore miner Vale said it would take time for its new mega-ships to be able to enter Chinese ports but stood by its shipping strategy.Its multi-billion dollar plan to cut freight costs by ordering a fleet of 35 of the world's biggest iron-ore carriers as it aims to tap demand in China, the world's No. 1 importer of the raw material used to produce steel, has faced stiff opposition from Chinese shipping players.
"It was definitely not a mistake," Vale's executive director of iron ore and strategy, Jose Carlos Martins, told a news conference on Wednesday in due time. These safety measures, the drafting situations when asked whether he regretted building the mega-vessels before getting permission to berth at Chinese ports."I think it is a question of time, and these vessels will be very much used on this route from Brazil to Asia."

Martins would not speculate how long it will take. "I think things will happen in ports, all of these things have to be seen, to be developed, without being in a hurry. It takes time. You need to be patient," he said. China has yet to allow any of Vale's giant ships to dock at its ports, forcing the world's biggest iron-ore producer to send its vessels instead to Italy, Oman and other destinations. Martins said there was one ship owner, "who is not happy with our strategy".

He added, "The Chinese government never said anything against it. This is a port issue. We need to solve it with port authorities." In a further setback for the group, the damaged Vale Beijing, which is the world's largest iron ore carrier, was towed on Tuesday from its berth in Brazil for repairs, raising potential safety worries about the mega-ships. The ship, delivered in September to its owner and operator, South Korea's STX Pan Ocean, is longer and wider than three soccer fields. It was about to start its first fully loaded voyage, a planned run to Rotterdam.
"Vale Beijing belongs to STX. It is an STX project, so we are awaiting their appraisal. The other ships have nothing to do with this. They are the same size but they are different projects. They are different," Martins said."Now we are waiting ... I am not minimising this, it is very serious and we are really concerned. But we need to wait for the conclusions. Everything we say now is speculation."

Martins said he hoped the ship classification society would have "a good explanation" for the damaged vessel.
He added that he was confident about the seaworthiness of other mega-ships already in service.
"Vale Brasil is now on its fifth voyage, and we have Vale Rio de Janeiro, Vale Italia. All those ships are already berthing, loading without a problem," he said.

Vale's iron ore pricing strategy was also going through changes.
A 31 percent plunge in spot iron ore prices .IO62-CNI=SI in October prompted Asian steel producers to scour for adjustments in pricing the steelmaking ingredient to more closely reflect spot rates.
China Steel, Taiwan's top steelmaker, said it had agreed on a 23 percent cut in iron ore prices for October-December with the Brazilian miner, but Martins said rather than a discount, this was due to a switch to a new pricing method.
"Until last quarter we were using a lagging quarterly price, but with the recent drop in price, we got a lot of pressure from customers to change it and to use the (current) quarter average," Martins said.
"So we are now basing the price on the current quarter average ... nearly 80 percent of our sales are now done this way."
Vale said looking at average spot prices so far this quarter, based on the new mechanism, contract prices should be about 20 percent lower than if they were based on the previous method.
Martins said a move towards even shorter pricing was inevitable, adding there were several initiatives in the industry to create a pricing platform.
Source: Reuters

No comments: