An end to the Valemax dispute finally in sight?

2014-09-22

Valemaxes: the world’s largest bulkers and the most controversial ships in commercial shipping in many years may finally be used as they were intended after a deal between Cosco and Vale last week.

At the height of the dry bulk shipping boom, the Brazilian miner decided to beat soaring freight costs, which threatened the competitiveness of its iron ore exports to China compared to much nearer Australia, by building 35 VLOCs of a massive 400,000 dwt in capacity.

The first orders were placed at Rongsheng shipyard in China in August 2008, just about the time the bulk market was about to turn and plunge dramatically from its peak rate of $300,000 a day for a capesize.

However, the ships, originally dubbed Chinamaxes, were to prove a bit too “max” for the Chinese authorities’ liking.

Between the first orders being placed in 2008 and the first ships sailing out of the yard in 2011, the global economy crashed, taking dry bulk shipping markets with it in spectacular fashion, and Chinese shipowners apparently unhappy at being left out of the giant VLOC party, lobbied hard to have them banned from the country’s ports.

So when the first vessel did indeed sail out of the yard it was by then called a Valemax and faced a rather uncertain future unable to call in the country it was built to export to.

Fast forward to September 2014 and a Valemax has only ever twice called a Chinese port and instead they have been forced to carry out floating transhipment operations in either Malaysia or the Philippines, which essentially wrecks the business model behind building the vessel.

But last Friday, after several months of entente, saw Vale announcing it would sell four of the VLOCs to Cosco for long-term charter back to the Brazilian miner. Cosco is also to order 10 more similar ships in China.

The ban at Chinese ports, the stated reason for which is safety, is yet to be lifted but one can only imagine it is only a matter of time, and it could well be done with very little in the way of fanfare when it is.

The world’s capesize owners will no doubt be keeping a close eye on developments with a mixture of interest and trepidation as it is increased iron exports from Brazil to China that are seen as the potential driving force for a better to what has largely been a miserable year.

Source from : Seatrade Global

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