RPT-UPDATE 2-Vale reroutes China-bound iron cargo to Italy

Tue Jun 21, 2011 6:41pm EDT

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 RIO DE JANEIRO, June 21 (Reuters) - Brazilian mining giant
Vale (VALE5.SA) said on Tuesday it rerouted 391,000 tonnes of
iron ore, its first cargo aboard a new class of giant bulk
carriers, to Italy from its original destination of China.
 The cargo is being shipped aboard the Singapore-flagged
Vale Brasil, the world's largest dry-bulk vessel, a ship
designed to reduce the cost of shipping the main steel
ingredient to China -- the company's biggest market.
 "The alteration (of the destination) is part of the
flexibility in Vale's integrated logistics policy that allows
Vale to reallocate the destination of exports, based on the
needs of the market," the company said in an emailed
statement.
 Earlier this year Vale said it had not received permission
for its so-called "Chinamax" or "Valemax" vessels to enter
Chinese ports fully loaded.
 When asked whether Chinese authorities had blocked Vale
Brasil from entering the port of Dalian, a company spokeswoman
declined to comment.
 However, the statement said "Vale's expectation is that
Vale China, the first vessel of the Valemax class totally
produced in China and financed by Chinese financial
institutions, will have a Chinese port as its first
destination."
 The iron ore aboard the Vale Brasil can be used to make
about 261,000 tonnes of steel, or nearly three and a half times
the amount used to build San Francisco's Golden Gate bridge.
 Vale has commissioned 30 of these ships, to be delivered
through 2013. All are larger than the previous largest
bulk-carrier record holder, the 365,000-tonne MS Berge Stahl.
 The fleet is expected to drive world freight rates lower as
the new vessels add transport capacity to a market that has
already seen a rapid increase in ships and ship size.
 In the past year the Baltic Exchange Dry Bulk index
.BADI, a measure of dry-bulk shipping costs around the world,
has plunged 45 percent.
 Vale faces increasing competition in China from Australian
miners. While Australian ore generally has less iron content
than Brazilian ore, it is mined closer to the China, the
world's largest iron-ore market and steelmaker.
 As of June 20, the cost of shipping ore to China from
Vale's port of Tubarao in Brazil was $19.75 a tonne, according
to the Metal Bulletin Web site, or more than double the $7.75
it cost to ship ore from Australia's port of Dampier.
 As of late Monday, the Vale Brasil was steaming southwest
along the South African coast near Durban, on course to
re-round the Cape of Good Hope and re-enter the Atlantic Ocean,
according to MarineTraffic.com.
(Reporting by Brian Ellsworth and Jeb Blount, additional
reporting by Silvia Antonioli and Jonathan Saul in London;
Editing by David Gregorio and Sofina Mirza-Reid)


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