China Steelmills Want Vale Mega Ships to Dock at Nation’s Ports

China’s steelmakers, the world’s biggest iron-ore buyers, favor Vale SA (VALE3)’s very large ships carrying the raw material to get government approval to dock at the nation’s ports as the move will cut transport costs.

“The ships will benefit the steelmakers as they will lower costs than those incurred using small ships,” Zhang Changfu, general secretary of the China Iron and Steel Association, said today in an interview in Beijing. “If the government asks for our advice, I would say that. So far, the government hasn’t made a decision.”

Vale, which controls about 26 percent of the world’s seaborne iron-ore trade, is spending more than $8 billion to run very large ore carriers to Asia from Brazil. The so-called Valemax ships will lower costs and allow the Rio De Janeiro- based company to compete with Australian iron ore exporters.

Carolyn Tang, a public-relations official with Vale in China, declined to comment when reached by Bloomberg News.

Vale is seeking permits for the vessels to call at Chinese ports, Jose Carlos Martins, Vale’s head of ferrous and strategy, told journalists in London on Dec. 7. The plan has spurred opposition from Chinese shipowners, which own the smaller ships and say the move will worsen overcapacity and cause industry wide losses.

Rio Tinto Group, BHP Billiton Ltd. (BHP) and Vale signed separate agreements last month to sell some of iron ore through China’s spot-trading platform, which started today. The platform will strengthen the bargaining ability of steelmakers and improve transparency, according to the China Beijing International Mining Exchange, which set up the online platform, along with the association.