Chinese regulators are loosening restrictions to allow Brazilian iron ore producer Vale's 400,000dwt Valemax vessels to directly unload at the country's ports.
China's transport ministry has issued an internal circular amending its design code for ports to include vessels up to 400,000dwt, signalling it could end its three-year ban on Valemax vessels docking in China.
"Vale confirms that it has been informed of China's transport ministry's decision to attract larger ships, among which are the Valemaxes," the company said.
Valemaxes can carry up to 400,000t of iron ore. But China only allows the vessels to dock if they are loaded with 300,000t or less, citing safety risks. The requirement for partial loading undercuts Vale's goal of shaving costs from the 40-45 day journey from Brazil. Freight costs for Australian iron ore shipments are typically cheaper, with only an 11-day journey to China.
Vale also incurs costs from unloading Valemaxes at trans-shipment facilities, where iron ore is transferred to smaller vessels for delivery to China.
Six Chinese ports have the capacity to take the 400,000dwt Valemax vessels: Dalian, Dongjiakou, Rizhao, Ningbo, Qingdao and Lianyungang.
"So far we have not gotten any final confirmation from the transport ministry about giving permission for Valemaxes with 400,000t capacity to discharge or arrive in China's main ports," a Dalian port official said. "We heard some rumours saying that the transport ministry internally issued an announcement about design rules for 400,000t ships. This might be in preparation for the policy to allow Valemaxes in the near future."
The first Valemax docked at Dalian in December 2011 carrying a 388,000t cargo. The port also took a 350,000t Valemax cargo last year. But vessels carrying cargoes of more than 300,000t must submit an application to the transport ministry for approval to dock, the port official said.
The most recent Valemax to dock in China did so in October, when a partly-loaded 300,000t cargo was discharged at Dongjiakou port near Qingdao. The port call, together with agreements Vale signed last year with large state-owned Chinese companies and shipowners, prompted the latest round of speculation that the policy could be loosened.
Conglomerate China Merchants in September agreed to build 10 Valemax ships to ship iron ore from Brazil to China over a 25-year period. The deal came a month after state-owned Cosco Shipping agreed to buy four Valemax vessels and build 10 more.
The decision by Cosco and China Merchants to take a position in the Valemax trade could lead one of the principal proponents of the ban, the China Shipowners Association, to end its opposition.
Vale also signed an agreement with Qingdao port in December to establish a sister-terminal relationship with its Brazilian port operations.
