Reuters reported that Vale SA is diverting iron ore shipments to the Philippines as a way of shipping its product to China, as the Asian economic powerhouse continues to resist super sized vessels destined for Chinese ports.

Reuters reports that two of the world's largest iron ore carriers owned by Vale are due to arrive in Subic Bay, Philippines next month.

Vale's plan is to use the Philippines as a trans shipment hub that, while more expensive and employs more workers, will allow the product to reach China via smaller Panamax and Capsize vessels.

It takes at least a month for vessels from Brazil to reach China, versus a week from the Philippines. Vale is also setting up a trans shipment hub in Malaysia as an alternative to Chinese ports.

The story quotes traders saying the cargoes of both vessels, each of which carries about 350,000 tonnes of iron ore, is worth some USD 100 million at current prices.

While Vale's Chinamax started unloading its first iron ore in China at the end of December 2011, the country's seaports have been reluctant to accept Vale's super carriers. Chinese ship owners 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.

China is by far the world's largest importer of iron ore, a crucial steelmaking ingredient.

(Sourced from www.reuters.com)