Vale says Chinese ban on its giant ships should be lifted next year

Valor Economico reports Jose Carlos Martins, executive in charge of Brazilian giant Vale's ferrous operations, expects the company's Valemax ships to start docking in China in 2013.

Brazil-based Vale (NYSE:VALE) has so far received 18 of the 35 it has ordered from Korean and Chinese shipbuilders, but they have been drifting aimlessly since May last year because China, by far Vale's biggest customer, granted one vessel port entry but subsequently banned anything over 300,000 tonnes.

The dry bulk carriers are 362-metre-long and 65 metre wide vessels that can carry 400,000 dead-weight tonnes of iron ore and cost more than $100 million a shot.

Currently 80% of the world's iron ore is borne by so-called Capesize vessels which can only carry a third of the cargo of a Valemax.

Martins also indicated that Vale may open a distribution center in China – responsible for consuming almost 60% of the seaborne iron ore trade – next year.

The Rio de Janeiro-based company were force to use transit centres in Africa to bring ore to its customers in China because of the ban.

In December 2011, one of the ships – rather unfortunately called the Vale Beijing – ruptured its hull and temporarily blocked a port from where Vale ships more than 130 million tonnes per annum.

Chinese shipowners have been saying the carriers will worsen overcapacity and depress freight rates, while steelmakers are also against the leviathan-size ships, which are described as “each almost as large as the Bank of America tower in New York,” because they will give Vale even more control over pricing and delivery.

Vale, BHP Billiton and Rio Tinto completely dominate the 1 billion tonne seaborne iron ore trade – Vale alone controls a quarter of world supply.