Vale-designed megaship docks in Qingdao after China lifts ban
Source: www.chinamining.org Citation: Global Times Date: July 06, 2015
A huge iron-ore carrier designed by Brazilian mining company Vale anchored at a port in East China over the weekend, local media reported, signifying that the country`s bulk shipping industry has entered the era of megaships.
Docked at Qingdao Port, East China`s Shandong Province, on Saturday, the carrier, named Yuan Zhuo Hai, is a 400,000-ton vessel bought by China Ore Shipping Pte, a joint venture between China`s two leading shipping companies - China COSCO Bulk Co and China Shipping Development Co, Qingdao Evening News reported.
This is the first time a dry-bulk vessel with a 400,000-ton capacity was permitted to anchor at a port in China, the report said. In 2012, the Ministry of Transport, citing technical reasons, banned huge iron-ore carriers from docking at Chinese ports.
The ban was lifted on Thursday with four ports - Qingdao Port in East China`s Shandong Province, Dalian Port in Northeast China`s Liaoning Province, Tangshan Port in North China`s Hebei Province, and Ningbo Port in East China`s Zhejiang Province - being allowed to accommodate huge dry-bulk ships to join the megaship trend, according to a statement jointly issued by the Ministry of Transport and the National Development and Reform Commission.
"Use of megaships has already become an industry trend, which can help shipping companies reduce operating costs," Wu Minghua, a Shanghai-based independent analyst on the shipping industry, told the Global Times Sunday.
In May, China Ore Shipping signed an agreement with Vale to buy four huge iron-ore ships from its Brazilian partner, according to a press release posted on COSCO Group`s website. The carrier Yuan Zhuo Hai is a part of the deal.
"Generally speaking, a vessel with the capacity of 400,000 tons or above can help cut operating costs by 15 percent to 20 percent," said Wu.
Cost saving is widely regarded as a top priority for domestic shipping companies which have been hurt by the economic downturn since 2014.
Unnamed Barclays analysts were quoted by Financial Times on Friday as estimating that each Vale 400,000-ton vessel, known as Valemax, would boost COSCO Group`s earnings by 11 million yuan per year.
However, Wu noted that the economies of scale will not have an immediate effect due to low shipping rates amid weak domestic demand.
Data from the General Administration of Customs shows that China, the world`s largest buyer of iron ore, imported 70.87 million tons of iron ore in May, down 8.41 percent year-on-year.
Baltic Dry Index (BDI), an economic indicator to measure shipping costs for raw materials such as iron ore, stood at 794 on Thursday, dropping 4.22 percent from a week ago.
The BDI will gradually pick up as China has already rolled out a batch of stimulus measures to boost the domestic economy, Shanghai-based Changjiang Securities wrote in a research note late in June.
As for Vale, Wu believed that China`s policy change is a good news, enabling the Brazilian miner to cut shipping costs to Asian markets and better compete with other global miners.
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