Wednesday, September 7, 2011

China and Global Bulk Shipping | Ruffling Feathers Again | Asia Sentinel

Chinese Shipper Says Do It Our WayPDFPrintE-mail
Written by Our Correspondent   
Chinamax: one big boat
COSCO Blocks a Brazilian Ore Carrier from Dalian
China’s state-owned shipping giant COSCO is again throwing its weight around, this time to the distress of Brazil.

COSCO may now have backed off from an earlier refusal to pay fees on long term bulk carrier charters because it was losing money thanks to a collapse in freight rates. That refusal created waves throughout the shipping and ship financing worlds. But it was not the end of COSCO’s efforts to manipulate global markets in its own interest.

Another, related move, has been to persuade the Dalian port, home to much of the COSCO fleet, to deny access to the giant 400,000-ton ore carrier recently delivered to the Brazilian mining giant Vale, which wants to use Dalian as an unloading and distribution base. The ship is the first of 30 so-called Chinamaxes to be delivered between now and 2013 to Vale, which decided to move into shipping on this scale to reduce the cost of delivering iron ore over long distances. It was particularly aimed at the China market because shipping costs put Vale and distant Brazil at a disadvantage compared with much closer Australian ore suppliers.

But COSCO obviously has little concern for free trade rules or indeed for the interests of Chinese ore consumers. It is worried that the arrival of the giant bulk carriers will add to the state-owned shipping line’s own chartering losses. The Baltic Exchange’s Dry Index, measuring average global freight costs for dry cargo, has fallen 30 percent already this year and could fall further as new ships arrive while demand may be stagnating. 

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