Nippon Yusen KK has inked two long term iron ore shipping contracts with Chinese steel giant Anshan Iron and Steel Group Corp.
The first contract is for 10 years, to 2019 and is for a total of 15 million tonnes of iron ore to be shipped from Western Australia to China. The second contract is a five year agreement beginning in January under which 2.5 million tonnes of iron ore will be shipped from Brazil to China.
Nippon Yusen will primarily use capesize bulk carriers which can hold around 170,000 tons of cargo to transport the ore. By entering into long term contracts, the shipping company aims to create a stable earnings structure and reduce exposure to market fluctuations.
Anshan, which produced 23.4 million tonnes of crude steel in 2008 is looking to secure iron ore shipping capacity in response to growing steel production. With shipments to Japanese steelmakers, who have been Nippon Yusen's main customers, leveling off, the company aims to turn shipments to Chinese steelmakers which produce nearly 40% of the world crude steel into a new earnings source.
Source: Steel Guru/Trading Markets
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