Vale's 3rd VLOC to serve Brazil
Miner Vale will take delivery of another 400,000 DWT VLOC next month, its third after the ‘Vale Brasil’ and ‘Vale Rio de Janeiro.’ Surprisingly, the first of Vale’s mega-bulkers to be named for a foreign trading partner does not carry the name of one of its Asian customers. Instead, the ‘Vale Italia’ will be used primarily to carry iron ore from Brazil to the port of Taranto in southern Italy. Italy’s iron ore imports plummeted in 2008 following the financial crisis, but its steel industry has begun to recover, producing 18.7 MT of crude steel so far this year - 11% higher year-on-year and approaching pre-recession output levels. Its iron ore imports have followed a similar trend, and shipments from Brazil have risen 37% year-to-date. Italy has been a bright spot for Brazil’s iron ore exporters in Europe this year, as weaker buying from Germany and France has actually seen overall exports to the EU down 3.5% year-to-date. Based on the pace of exports in the first eight months of the year, Brazil is on track to ship more than 11 MT of iron ore to Italy this year for the first time since 2007. While it remains to be seen what impact the current European debt crisis will have on the Italian steel sector in the coming months, current softer iron ore prices and the reduced freight costs that a VLOC should offer could further support Italian iron ore buying in Q4 – as long as demand for steel holds steady.