Brazilian mining giant Vale is reported to have changed its pricing system for iron ore exports as part of a complete overhaul of its system for delivering ore to its overseas customers, particularly in China.
Hitherto, the customer paid for the iron ore and then had to pay to ship it from Brazil, a system known as FOB. Now Vale is seeking to encourage particularly its smaller- and medium-sized Chinese customers to accept CIF pricing, in which the cost of transporting the ore is included in the price paid. Apparently, it is China’s smaller and medium sized steel companies that are the main source of demand for iron ore in that country at the moment.
Vale is able to offer the CIF option, which will allow smaller- and medium-sized Chinese steelmakers to control their costs better and which will also reduce Vale’s dependence on the spot market, because it operates its own shipping fleet, through its wholly owned subsidiary company, Docenave. Set up in 1962, Docenave used to convey iron-ore mined by its parent company to overseas customers but in 2001 Vale decided to exit the transoceanic dry bulk shipping business and had sold off most of Docenave’s ships by 2003.
The shipping company has since been focused on transporting iron ore along the Brazilian coast, on providing port services at Vale’s own terminals, and on acting as a freight desk for its parent group, arranging shipping for Vale’s complete range of export products, and not just from Brazil. It also serves as a market intelligence unit for the group, gathering information on overseas dry cargo freighting contracts. As a result, its fleet was reduced to just three dry bulk carriers, each of 151 000 DWT as well as some 19 tugs at five Brazilian ports.
Source: Steel Guru
No comments:
Post a Comment