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China seen as stop-gap center for Vale with key iron ore port TRMT shut on COVID-19

  • Wednesday, April 8, 2020
  • Source:ferro-alloys.com

  • Keywords:Vale,China
[Fellow]China seen as stop-gap center for Vale with key iron ore port TRMT shut on COVID-19

[ferro-alloys.com]As China slowly comes out of lockdowns imposed earlier this year, its ports and iron ore blending facilities are being seen as viable alternatives for avoiding trade disruptions created by quarantine measures enforced at key Asian export hubs, dry bulk market participants said.

Brazilian mining major Vale, which has two trans-shipment centers in Southeast Asia -- one at Teluk Rubiah, Malaysia and the other at Subic Bay, the Philippines -- is now looking to ship consignments out of China to meet demand from its iron ore customers in Southeast Asia.

Market participants said that a new iron ore export center has popped up with Vale requiring bulk ships to move iron ore cargoes from Chinese ports to Indonesia and Vietnam.

Vale needs three ships to move iron ore cargoes from China currently, sources said.

It seeks tonnage to haul a 70,500-mt (plus/minus 5%) iron ore cargo from Zhanjiang to Bahodopi in Indonesia for April 7-11 laycan; another ship to move a 73,000-mt (plus/minus 10%) iron ore fines cargo from Dalian to Vietnam's Dung Quat port, loading before April 12; and a third vessel to deliver a 100,000-mt (plus/minus 10%) iron ore fines cargo from Dalian to Son Duong in Vietnam for April 7-11 laycan.

STOP-GAP MEASURE

The operations at Malaysia's Teluk Rubiah Marine Terminal, or TRMT, were temporarily halted from March 24 as it was unable to secure the minimum resources to safely operate the terminal, Vale said in a statement released on March 23.

"TRMT is still closed," a shipbroker said Wednesday.

According to the Vale statement, ships heading to TRMT will be redirected and redistributed among Vale's blending facilities in China with no expected impact on production and sales volume in 2020. However, there would be an impact on sales of approximately 500,000 mt during the first quarter of this year, it added.

"It's simply a replacement of the usual trade from TRMT as Vale still needs to supply its customers [in the Pacific]," a shipping source familiar with the issue said.

China's northern ports such as Dalian, Yantai and Dongjiakou are predominantly used as a base to meet Vale's Brazilian Fines volumes contracted for Japan and South Korea.

The iron ore cargoes destined for Vietnam from Dalian have to be shipped on Panamaxes, Post-Panamaxes or the baby-Capesize ships due to draft restrictions at Dung Quat and Son Duong.

Many participants see these new loading centers as stop-gap measures to deal with the current situation and expect iron ore shipments from TRMT to resume once the virus outbreak is under controlled.

"This [the change in trade centers] doesn't happen often," the shipping source said.

"South China, Southeast Asia and India will be supplied from TRMT as usual and [the cargoes out of] China will serve either the cabotage or the Japan, South Korea, Taiwan markets once everything is back to normal," the source added.

Malaysia was the destination of 6.3% of iron ore shipments from Brazil last year. Out of TRMT, 17 million mt was shipped to China and 2.6 million mt to Vietnam, according to Bachero Costa Research.

(S&P Global Platts)

  • [Editor:王可]

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