China to accept Brazil's super-sized iron ore carriers

China has lifted its ban on the massive Valemax iron ore bulk carriers owned by Brazilian mining giant Vale.

With capacities ranging from 380,000 to 400,000 short tons deadweight, the Valemax carriers are the largest bulk carriers ever built, with draughts of 22-32 m.

Shipowners have lobbied against Vale’s vessels, fearing they would give the company a monopoly over the iron ore and shipping industries. China responded by banning the carriers from docking at mainland Chinese ports in 2012 because of concerns over supply and prices.

As a result, Vale has been using transit centres in Africa and the Philippines to bring ore to China and is also building a facility in Malaysia to service the region.

However, increasing Chinese demand for Brazilian iron ore may have led to the lifting of the ban. China Cosco has signed a 25-year deal with Vale that involves 14 of the Valemax ships, according to the South China Morning Post.

Meanwhile, the Bureau of Resources and Energy Economics (BREE) has released its September quarter report, which said global commodity supply had grown significantly over recent years, placing pressure on prices in the medium term.

“A rapid increase in iron ore supply combined with moderating growth in China’s steel production have pushed iron ore prices lower in 2014. Prices have fallen nearly 40% from around US$130 a tonne (CFR China) in January to US$82 a tonne in September,” BREE said.

The group said that while iron ore price volatility is not uncommon, oversupply is now flooding the market.