China stainless steel mogul fights to avoid a second collapse
A debt crisis is threatening the future of one of the world’s top stainless steel producers, Jiangsu Delong Nickel Industry.
Reuters reports the largest bulk carrier ever built, designed to carry iron ore to China from Vale’s mines in South America, is disabled in a Brazilian port.
The Vale Beijing, a 361-metre-long vessel that can carry 400,000 tonnes of iron ore, has a leak in a ballast tank and shipping agents told Reuters the vessel had ruptured its hull. If the $110 million vessel – one of up to 19 ordered from Korean shipbuilders – should sink it would severely affect operations at the port from where Vale was hoping to ship 130 million tonnes this year.
It could also turn out the be the final nail in the coffin of Vale’s disastrous strategy to tighten its grip on the world’s annual 1 billion tonnes sea-borne iron-ore trade. China, the world’s number one market for the steelmaking ingredient to where Vale ships about 45% of its output, turned away another carrier in the fleet earlier this year.
MINING.com reported a fortnight ago Vale’s fleet of super carrier has not made one voyage in six months of operation. Chinese shipowners say the carriers will worsen overcapacity and depress freight rates, while steelmakers are also against the leviathan-size ships, because they will give Vale even more control over pricing and delivery.
Bloomberg at the time quoted an analyst at China Merchants Securities Co. saying the company could 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.”
The shipping strategy appears to have hastened a management shake-up at Vale. CEO Murilo Ferreira, who took on the job in May, in November named a new logistics head and replaced the company’s CFO.
2 Comments
Stealthys11
<<_>> so Ave hail ceasar! korea
Playersdad
this is so typical of the vale mineset they don’t care what the chinese think or want we will force them to buy our ore and deliver it with our ships,they want to be the worlds largest miner even if it drives them broke.