Vale gets 1st China-built mega iron ore carrier, market shudders

Brazilian mining firm Vale SA has received its first Chinese-built mega bulk carrier, swelling what will be an unprecedented fleet linking the world's biggest

iron ore producer with its biggest client, China.
The arrival of the 400,000-tonne vessel, Vale China, is expected to exacerbate the shipping industry's oversupply problem and weigh on already weak freight rates.
Vale's Murilo Ferreira traveled over the weekend to China for the first time as chief executive to attend the launch ceremony at the shipyard of China Rongsheng Heavy Industries in Nantong.
"Choosing China Rongsheng as the first destination of his first China visit, the new chief executive and Vale demonstrated strong faith in long-term cooperation between the two groups," said China Rongsheng in a statement.
"This new very large ore carrier is the first VLOC of a few to be delivered in the coming two years."
Vale China is the second so-called Valemax, the world's largest dry bulk carriers, to be delivered to the Brazilian company so far this year.
The firm is booked to own at least 19 mega iron ore carriers and could charter as many as 35 before the end of 2013 on expectations Chinese demand for the steel-making ingredient will continue to grow.
China Rongsheng has a contract to build at least 16 of them, with the remainder to be built by Korean shipbuilder Daewoo Shipbuilding & Marine Engineering .
MARKET PRESSURE
The arrival of each Valemax will further weigh on the global freight market, which is down more than 15 percent since the start of the year as ship supplies outpace demand.
"Each vessel is the equivalent to two capesizes, so yes it adds to the pain," said Janet Lewis, shipping analyst at Macquarie Securities, referring to the largest category of dry bulk carriers.
The first vessel, Vale Brasil, completed by Daewoo in May, delivered its first iron ore cargo to Italy after being rerouted from China for commercial reasons.
Vale has said it expected Vale China to have a Chinese port as its first destination.
Valemaxes can travel to at least two ports in China -- Dalian and the Qingdao's port of Dongjiakou, Chinese officials said.
The port of Majishan is also believed to be capable of accommodating the ships, Vale said.
The company expects at least 10 ports worldwide to be able to receive the maxi-sized ships and has two transshipment stations located in Oman and Malaysia.
Source: Reuters