China mulls easing rules to allow larger vessels

2013-09-04

China is studying a plan to allow some of its ports to receive larger vessels, a move that may pave the way for Brazil’s Vale SA to start delivering iron ore via its growing fleet of giant carriers.

Chinese shipowners have strongly opposed access for Vale’s mega ships amid concerns they could worsen a shipping glut and steal market share, but their use would cut shipping costs of the raw material for China’s steel mills.

For Vale, approval for its Valemax vessels to enter Chinese ports would help the miner cut transport costs by up to a third and allow it to better compete with Australian rivals Rio Tinto and BHP Billiton , whose mines are closer to China.

China’s Ministry of Transport barred the mega ships from the country’s ports in early 2012, citing safety concerns after the first 400,000 deadweight ton Valemax docked at Dalian Port in December, 2011.

It said vessels for oil and dry bulk commodities would not be allowed to exceed a port’s nominal capacity, implying that big ports rated at about 250,000-300,000 tons for iron ore cargo are not allowed to take Valemaxes.

However, Chinese ports have been upgrading their infrastructure in recent years to tap into strong demand for dry bulk commodities and oil, putting their true capacity above their approved capacity.

In a draft document published on its website on Aug. 23, the transport ministry said ports may be allowed to receive ships based on the inherent capacity of their infrastructure, pending regulatory approvals.

A ministry official said the proposal was still subject to change. The draft document sought feedback from local marine authorities, ports and shipowners by Sept. 6.

Officials with China’s Shipowners Association and China Ports and Harbours Association contacted by Reuters said they were still seeking opinions from their members including shipowners and ports.

Chinese shipowners have also been building larger, more fuel-efficient vessels to feed robust demand from the world’s top consumer of many commodities from grains to iron ore, although not as large as the Valemax vessels.

“The main objective is to allow ports to accept larger ships without endangering either berths or ships, but it looks like the government is loosening control, which is good news for Vale,” said a shipping source in Shanghai.

Source from : malaya

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