China extends ban on Vale's giant ore carriers
Brazil's Vale's first of 35 mega-carriers capable of carrying 400,000 tonnes of dry bulk cargo embarked on its maiden voyage to Dalian, China in May 2011.
The 362-metre-long and 65 metre wide Valemax class which can carry more than twice as much as the next size dry bulk vessel only made it halfway there.
Then Chinese officials egged on by the country's shipping firms and steel industry decided to ban the giant vessels – 30 of which have been christened – from the country's ports over fears of the impact on supply and prices.
Despite the fact that most of the carriers were built by Chinese shipyards and financed by the country's development bank, as part of a massive restructuring China's ports authority last week set the maximum capacity of ships allowed to berth at 250,000 deadweight tonnes, effectively extending the ban on the Valemax class, indefinitely.
The full Valemax fleet enter would be able to haul about 44 million tonnes a year to China, which consumes more than two-thirds of the world's 1.2 billion tonne seaborne iron ore trade.
Rio de Janeiro-based Vale first decided on the VLOC (very large ore carrier) strategy to help it compete with BHP Billiton, Rio Tinto and Fortescue Metals.
Vale controls almost a quarter of world supply, but is losing market share to its Australian rivals which enjoy much shorter and cheaper routes to Chinese ports.
Although its Valemax fleet is calling on ports in Japan, South Korea, Italy and elsewhere, Vale has been forced to use transit centres in Africa and a distribution facility in the Philippines to bring ore to its customers in China because of the ban. The Brazilian giant is also building a transshipment facility in Malaysia to service the region.
Currently 80% of the world's iron ore is borne by much smaller Capesize vessels, but Valemaxes may still play a bigger part in the trade, reports The Maritime Executive:
"A Valemax managed to dock at China's Lianyungang port in April last year. Besides Dalian and Lianyungang, other ports that may be able to accept Valemax vessels include Dongjiakou and Caofeidian, as well as Zhanjiang and Ningbo Zhoushan, which are under construction, industry sources said."