Valemax "monopoly" Pakistan routes

On the flight from Brazil to China iron ore trade market, this growing class of ship teams will eventually dominate, and in essence "crowd out" the demand for ready-capesize vessel.

According to the well-known dry bulk analysts Alphabulk said, with a total of up to 65 Valemax (large ore carriers (ship yard sale)) fleet have in place, namely Capesize rental market in Brazil - this probably will be a key route China lose foothold.

Just after the Chinese government decided to stage this kind of 400,000 tons ship "flashed green light", as well as local shipping giant COSCO and Sinotrans exposed new 30 Valemax order message, Alphabulk began to closely monitor the impact of related events.

You can imagine, a time when international dry bulk market gradually warmer - rent levels have risen to nearly $ 20,000 / day, custom-made 30 new Valemax message is equivalent to expectant owner "poured a pot of cold water."

According Alphabulk estimates, just make the decision to lift the ban by, it can occupy 0.6 percent of the current swap capesize demand. Therefore, in the shadow of continued excess capacity, the new initiative is not only Valemax "inappropriate" and "vulnerable to criticism."

Wait until after the delivery of the ship above the new total number of Valemax fleet will increase to 65. It is reported that the new custom-made ship has agreed to a long-term lease to CVRD (Vale).

In accordance with a single ship Valemax Exchange Tubarao Port (Tubarao) wave C3 route to Qingdao, can transport 160 tons of iron ore per year calculated, the entire fleet capacity will reach an annual level of slightly more than 100 million tons ʱ??

This is in total exports from Brazil to China last year, 180 million tons of which will be accounted for 60% of the share. According Alphabulk estimated convoy in total iron ore trade between Australia, Brazil and China are among, but also accounted for about 25%.

Furthermore, the agency said there is a lot of ships between Pakistan itself specializes in providing contacts service, so in the future Capesize market that is rented living space probably will be depleted.

Alphabulk pointed out that "If China's iron ore market remained stable, while the established long-term contracts of affreightment and other proprietary consider this route, including the ship, then the future that is part of the C3 route rent can almost negligible."

In fact, let Valemax trade routes leading this market strategy, but added in line with Chinese government's appetite.

Given China's high dependence on imported raw materials in Brazil, it is bound to expect freight rates and ship supply in, reducing the risk of imported ore.

As Vale party, it seems also want to follow LNG industry-specific long-term stability properties. Alphabulk analysts also regard and asked, "Vale is not between Brazil and China want to build a huge floating conveyors, thereby eradicate all possible affected by market volatility?"

However, over-reliance on long-term lease Valemax mode of operation itself can trigger a series of problems.

First, because the proportion of long charter between Australia and China is very high, C3 route is actually an important benchmark to establish Capesize spot rent.

If you lose the rent market that is also likely to lead to shipping Vale actually paid, higher than the original spot charter. This is equivalent to it at subsidized freight service in China.

"In addition, if that is today's rental market to maintain momentum in the longer period of time, while the Australian miner can continue to increase production, Vale will have to continue to subsidize exports to China in order to maintain a competitive position in the steel supply-side."

The Chinese government has said the statement, will be open to domestic Valemax 4 Port, including Dalian Dagushan, Caofeidian, Qingdao, Ningbo and Zhoushan Dong mouth.

According Alphabulk estimates, in order to allow the ship above the pier with feeder capacity, port-related infrastructure investment has reached 650 to 850 million US dollars.