November 20, 2008

China Shipping scrambling for iron ore shipping market

It is reported that China Shipping Development Company Limited is to sign contracts of affreightment to develop its large dry and bulk cargo ship fleet, especially 230,000 tonnes and 300,000 tonnes vessels and actively participates in transportation of China's imported iron ore resources.

China Shipping Development Company Limited signed an iron ore transportation agreement with Shougang Group to transport 37 million tonnes in 15 years on October 26th 2006 then it inked a same agreement with Baosteel Group on January 16th 2007. It reached overall cooperation with Wuhan Steel and signed an agreement for iron ore transportation of 170 million tonnes during 15 to 20 years on October 19th 2007. CSDC also promised to launch 200,000 tonne plus vessels and set price according to international regulations.

It inked a contract with CSSC Guangzhou Longxue Shipbuilding Co Ltd on February 2nd 2007 to build four 230,000 tonne Very Large Ore Carriers and another contract to construct four 230,000 tonne ones on October 27th 2007. It also signed a contract with Dalian Shipbuilding Industry Co Ltd.

China's iron ore imports surged in recent years. Import volume recorded 275 million tonnes in 2005 up by 32.3%YoY and 326 million tonnes in 2006 up by 18.6%. The figure in the first nine months has broken 284 million tonnes YoY increase of 14.9%. Experts forecast China's iron ore imports will rise some 13% every year during the 11th "Five Year" Plan and will surpass 500 million tonnes in 2010. Robust demand is even expected to continue until 2015.

Australia, Brazil, India and South Africa are major sources of the country's iron ore imports, thus the imports are mainly transported by ocean shipping approximately half of the world's total shipping volume. BDI index hit record high of 4512 points in 2004, then dropped owing to China's macro control yet rocketed up in this year and broke 10000 points in October 2007.

(Sourced from MySteel.net)