Brazilian iron ore giant, Vale, has disputed a published report that it could lease 50 very large ore carrier (VLOC) newbuilds, more than double its previously stated plans.
The Wall Street Journal (WSJ) reported on 29 April that Vale was in talks to lease around 20 VLOC newbuilds from China COSCO Holdings, plus 10 VLOC newbuilds each from China Merchants Energy Shipping (CMES), ICBC International Leasing, and Shandong Shipping.
Vale had confirmed in September that it would sign 25-year contracts of affreightment for 10 VLOC newbuilds to be ordered by CMES and 10 VLOCs to be ordered by China COSCO.
“There are no discussions over construction of 50 vessels,” a Vale spokesperson told IHS Maritime.
“The 50 [orders] being reported is quite a surprise,” said Clarkson Capital Markets analyst Omar Nokta in a new research note.
“In 2008, Vale’s first foray into ordering 400,000 dwt VLOCs cost around USD130 million apiece, essentially locking in a long-run implied freight rate of USD19/tonne on the Brazil-China route,” explained Nokta. “Since 2008, the Capesize freight rate has averaged USD15.50/tonne on the route and currently stands at USD9/tonne.
“This points to Vale’s current VLOCs as being too expensive relative to market averages, and it is somewhat surprising to see an even larger series of orders on the horizon given Vale’s previous investment,” said Nokta.