New policy likely to boost Vale's iron ore shipments to China

Author: Paul Ploumis
16 Feb 2015 Last updated at 01:30:00 GMT
BEIJING (Scrap Monster): The Chinese Ministry of Transport introduced a new rule allowing construction of wharves that can berth bulk carriers with capacities of 400,000 deadweight tons (DWT). The new rule announced last month is likely to boost bulk raw material shipments by Vale into the country. Earlier, the Ministry had allowed large ships of 300,000 DWT and above at Chinese ports.

Under the new rule, the limit for large bulk carriers is set at 403,944 DWT. This is very much close to the bulk ore carriers operated by Vale. The Ministry’s decision is viewed by the industry as a measure to boost iron ore trade with the Brazilian company. Furthermore, the new rule will help China to increase its iron ore reserves. The country had banned mega bulk carriers from entering the ports since 2011, owing to opposition from shipping companies and associations on account of fears that such a move would lead to monopoly and unfair market competition.

The Chinese domestic iron ore supplies are expected to decline by around 70 million tons. Consequently, the iron ore imports are likely to grow 7.1% in 2015 when compared with the previous year. The imports are projected to cross the 1 billion metric tons for the first time during this year. The imports from Australia and Brazil are likely to benefit by the new rule with the percentage share of total Chinese imports from these two countries projected to rise to 80% from 77% in 2014.

Vale has already signed strategic shipping agreements with state-owned COSCO Group, China Merchants Group and Shandong Shipping Corporation. This will provide easy access for Vale’s mega bulk carriers to Chinese ports.