Found this on minning.com. Maybe it is a good thing we are only looking for smaller ships.
Vale’s $2.3B white elephant: Chinese don’t want huge iron ore carriers | Andrew Topf | November 23, 2011
Email Article0 Comments.They were supposed to be the vessels that will ferry iron ore from the world’s largest exporter to the world’s largest customer of the crucial steelmaking ingredient. Instead, Vale’s new fleet of iron ore carriers could remain moored at home docks because the Chinese don’t want them.
Bloomberg reports that the Vale Brasil, the largest bulk carrier ever built, was designed to carry iron ore to China from Vale’s mines in South America, but it has not made one voyage in six months of operation. The reason? China is refusing to accept the vessel, which is part of a fleet of 19 ships that Vale is buying from Chinese and Korean shipbuilders in deals valued at $2.3 billion.
Bloomberg reports Chinese shipowners are 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.
The article quotes an analyst at China Merchants Securities Co. saying that Vale could have difficulty finding an alternative market for the huge ships, because no other market is as big as China’s. The company could also face large penalties for cancelling the shipbuilding contracts.
I’m pretty sure that Vale themselves have by now realized that they made a big mistake,” he said. “I find it really incredible that they committed so much money in this project without first getting written assurances from the Chinese side that they would be able to use the ships.”
Vale plans to ship about 130 million tons of iron ore on the route both this year and next, Bloomberg stated.
