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BULK - Vale ore fleet to drag freight rates lower-Zodiac

35127 fcras 25/10 2010 06:24

Monday, 25 October 2010

Brazilian mining giant Vale's* move to use its own fleet of 400,000 tonne iron ore carriers will have a major effect on shipping and will push freight rates lower, a senior ship official said.

Vale will take delivery of the first of 36 Chinamax ore carriers in June 2011 which will carry ore between Brazil and China.

The order includes very large crude carrier oil tankers which are being converted to carry ore.

Ian Shirreff, Shanghai-based chief executive of Zodiac**, which has contracts to bring iron ore to 20 of China's biggest state steel mills, said the development will "have the biggest effect on the market that we've seen in 30 years."

"They're planning 80-100 vessels to drive the market down so low that the differential between Brazil-China freight and Australia-China is minimal," Shirreff told the Coaltrans annual coal conference in Amsterdam on Tuesday.

"Make no mistake, this will happen," he added.

Shirreff said the giant bulk carrier will force rates down, adding that he estimated freight rates would return to the $10,000 to $12,000 a day time charter rate seen in 1977 within the next 5-10 years.

Average earnings for capesize vessels, typically hauling 150,000-tonne cargoes such as iron ore and coal, reached $45,666 a day on Tuesday, Baltic Exchange data showed.

Shirreff said for the next two to five years "the Vale effect" of the new Chinamax giant ore carriers would be the biggest factor affecting freight rates.

"It's all about iron ore, it's all about China," said Gurinder Singh, Vale director freight and international projects for shipping and ports, who spoke on the same panel at the conference as Shirreff.

Vale created the cape market by building cape vessels and persuading Japanese ore buyers to build deep water ports to take them, he said.

"Since 2009, Vale has tried to be part of the shipping market moving from selling free on board at ports to CFR (delivered), and freight and iron ore has decoupled so freight is now a much lower proportion of the delivered cost," Singh said.

"Freight is now 20 per cent of the delivered cost or even lower and 20 per cent is the magic number, it makes us more competitive," he said.

Vale's first Chinamax 400,000 tonne ore carrier is delivered next June out of 36 ordered in total plus VLCC oil tankers which are being converted into ore carriers in order to push down the freight cost of iron ore from Brazil to China and compete with Australian ore sellers, he said.

China's growing demand for coal and iron ore imports is undoubted, he said, due to well-known drivers including urbanisation, modernisation and general economic growth.

Singh said China will have three ports next year which can take Chinamax ore vessels and another seven are being built.

"Our customers and Vale need low and stable freight because when the Australia-Brazil differential is $40-60 nobody will buy ore from us but when the freight is low the differential is automatically very little," he said.

Source: Reuters
Zodiac Maritime Agencies Ltd:
Capesize Bulk Carrier ”Cape Krestrel” 1993 – 161.475 dwt
(Zodiac Maritime Agencies Ltd., UK)
12.01.10 - setting off for a short navigation from her anchorage off Hay Point where she is waiting to load coal.
Photo: © tropic maritime photos, Australia


25/10 2010 06:25 fcras 035128

Vale sees strong demand for iron ore in the next 3 years

Monday, 25 October 2010

BNamericas quoted Mr Roger Agnelli CEO of Vale, during Vale Day at the NYSE Euronext in London, as saying that Vale is confident there will be strong demand for iron ore for at least the next 3 years.

He added that "There will be enough market demand to consume Vale's projected output of 450 million tonnes per annum by 2014.

Demand will be led by Asian countries, mainly China."

Mr Agnelli said that the most important factor for buyers will be the quality of the product.

However, in addition to quality, companies need to address the issue of operational costs in order to make a project successful.

He added that "While good quality iron ore is available on the market, clients will not be willing to purchase lower quality raw materials.

I'm betting only on the good iron ore."

Vale extracts iron ore from Carajas, one of the richest iron ore provinces of the world.

The Rio de Janeiro based company is the world's largest iron ore producer and exporter.

Source: BN Americas

25/10 2010 07:07 le 035133

men der er stadig overkapacitet på de skibe der skal transportere iron oren

25/10 2010 07:10 le 035134

og jeg tror faktisk også at der overkapacitet i stålproduktionen i kina så man kan risikere at kina, der trækker behovet for jernmalm vil få en nedgang i importbehovet på stål

de bruger jo næsten halvdelen af verdens stål og der tror jeg man må regne med en opbremsning med nedgang i stålforbruget

26/10 2010 17:21 le 035211

Steelmakers signal soft patch extending to year end

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United States Steel Corporation
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Rio Tinto PLC
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Tue Oct 26, 2010 9:52am EDT

* ArcelorMittal sees Q4 core profit 25 pct down from Q3

* Expects lower Q4 steel prices, higher raw materials costs

* China slowdown hit Q3 steel demand

* U.S. Steel post Q3 loss, says Q4 could be similar

* ArcelorMittal shares off 5.4 pct, U.S. Steel down 4.5 pct

By Philip Blenkinsop and Steve James

BRUSSELS/NEW YORK, Oct 26 (Reuters) - ArcelorMittal (ISPA.AS), the world's largest steelmaker, and United States Steel Corp (X.N) forecast a sector soft patch extending to the end of the year with weak shipments and a margin squeeze.

Analysts were expecting a slight improvement from a poor July-September period when slowing growth in China combined with weak construction in the United States and thin demand in southern Europe.

The $500 billion steel industry, a bellwether for the broader economy, profited in the second quarter from a strong auto sector and booming Chinese demand, but since then the latter in particular has cooled.

Iron ore and coal costs rose, but steel prices did not and globally the fragmented steel sector is running at around 70-75 percent of capacity.

Although spelling pain for steelmakers, it has been a boon for miners, which have profited from tight supply of ore, consolidation and the ability to push through price hikes at peaks late in the second quarter.

"Clearly this is the big news of this call, how the demand remains muted into the fourth quarter of this year," ArcelorMittal Chief Financial Officer Aditya Mittal told a conference call. [ID:nLDE69O0SQ]

The company, whose output is more than double that of its nearest rival, said shipments would pick up just slightly in the final three months, average steel prices would be lower than in the third quarter and iron ore and coal costs would be higher.

ArcelorMittal shares dropped as much as 5.9 percent and were among the weakest stocks on the FTSEurofirst 300 index .FTEU3 of leading European shares.

Shares in U.S. Steel, the world no. 11 last year, dropped 4.5 percent in early trade after it said that activity in most of its markets had slowed from the second quarter and forecast lower shipments for its three main divisions in the fourth quarter. [ID:nN26115819]