China’s steel industry will support Brazil’s Vale mega ships if it could lead to lower iron ore prices, the China Iron and Steel Association (CISA) said. Vale is building the so-called very large ore carriers (VLOC), known as Valemax, to better compete with Australian miners Rio Tinto and BHP Billiton in supplying China with the steelmaking ingredient. Vale’s ore for China has to travel three times the distance as ore from Australia. “Chinese steel companies hope that transport costs will fall and that iron ore prices will fall,” said Zhang Changfu, Secretary General of the Association. Vale has ordered building a fleet of 35 Valemax carriers, each with a cargo capacity of up to 400,000 tons. Shipbuilders in China and South Korea are building them for the company. But the Ministry of Transport’s ruling in January last year bans dry bulk ships as huge as the Valemax from docking at Chinese ports because of lobbying by the shipping industry which cited the potential impact on domestic loss-making shippers.

Pakistan transfered the management of the strategically located Gwadar port from Singapore to China. Because Singapore’s PSA International has not developed the deep-sea port on the Arabian Sea “as desired”, Pakistan’s government agreed to transfer the port’s management to Chinese Overseas Port Holdings. China provided about 75% of the initial USD250 million in funding for the construction of the port in Pakistan’s southwestern Baluchistan province. Gwadar port may provide supplies for Chinese merchant ships and escort vessels, as well as serving China’s energy interests in the Middle East. Chinese investment can also help Islamabad to better develop Baluchistan province. “The contract of operation of Gwadar Port was transferred from the Port of Singapore Authority to China Overseas Ports Holding Co,” Pakistani President Asif Ali Zardari announced. On January 30 the Pakistani government  approved the transfer of Gwadar, currently a commercial failure cut off from the national road network. The Pakistanis pitched the deal as offering an energy and trade corridor to connect China to the Arabian Sea and the Strait of Hormuz, a gateway for a third of the world’s traded oil, overland through an expanded Karakoram Highway. Experts say it would cut thousands of kilometers off the distance which oil and gas imports from Africa and the Middle East have to travel to reach China. China paid about 75% of the initial USD250 million used to build the port but in 2007 PSA International won a 40-year operating lease.

A massive container ship that was meant to be the pride of Orient Overseas Container Line is languishing in a South Korean shipyard facing expensive repairs. The OOCL Brussels is one of 10 ships, and the first in the OOCL logo, ordered by parent Orient Overseas (International) for USD1.36 billion in 2011. The ship and its sister vessels will be the biggest in the company’s fleet, capable of carrying 13,208 20-foot containers. OOCL and Samsung Heavy Industries went ahead with a lavish dual-christening ceremony for OOCL Brussels and sister vessel NYK Helios on January 18, despite knowing that the delivery of OOCL Brussels would be delayed. There were more than 80 guests, including Shiu Kuang-si, President of Taiwan’s Mega International Commercial Bank, Chartsiri Sophonpanich, President of Bangkok Bank, and OOCL Chief Executive Andrew Tung. The OOCL Brussels is a very complicated piece of machinery and it is now in the final stage of being prepared for delivery. The ship was to have entered service on OOCL’s important Asia-Europe line at the end of last month, but now would not be delivered by Samsung until March 26. Delivery of the ship has been delayed after the tail shaft, which connects the engine to the propeller, was damaged during engine tests. Kim Ho-kwon, Samsung’s General Manager, confirmed that two sections of tail shaft, including the aft section closest to the propeller, both of which are 14 meters long, were damaged by shipyard workers. Speaking from Samsung’s Geoje shipyard, Kim added that “another very small accident” involving shaft bearings took place while the shaft sections were being removed. He said the cost of the damage was the shipyard’s responsibility. Two Hong Kong ship management companies contacted by the South China Morning Post said the tail shaft was custom-made for each vessel so it was difficult to estimate the cost of repairs. But they said repairs could cost up to at least USD2.25 million, which should be covered by Samsung’s insurers.

Cosco International, the marine fuels, paints and ship trading offshoot of China’s largest shipping company, is mulling entering the ship leasing market as part of a range of options to expand its operations. One person said the proposal was “still at the study stage” and could involve leasing newly ordered ships or those that have been completed but not delivered, possibly because the owners cannot get financing. Several banks, including ICBC and Standard Chartered, have launched ship leasing businesses where they retain ownership of vessels and charter them to operators at a daily rate, while the operator is responsible for repairs and crew costs. Standard Chartered has more than 20 ships on these bareboat charter contracts, including vessels operated by Wah Kwong Maritime Transport and commodities group Noble. Asked if Cosco International planned to deal exclusively with shipyards owned by its parent, China Ocean Shipping (Group), in offering ships on bareboat charters to Chinese and foreign operators, the person said: “In the long term, there is a definite focus on developing non-Cosco customers.” He said Beijing had policies to help with vessel financing, including tax breaks. Cosco International may also consider expanding its ship trading operation from the sale and purchase of Cosco vessels to cover ship chartering, where vessels are leased to commodity firms and traders. Sources said other plans included opening two new paint factories in China and acquisitions to strengthen its existing five businesses, which cover paints, marine equipment, ship trading, marine fuel and insurance. They believed the fastest-growing operation would be marine coatings because of two upcoming factories. Jotun Cosco (Qingdao) is due to complete a marine paint factory by the end of next month to produce up to 67,500 tons of coatings a year. Cosco Kansai (Shanghai) is also planning to start construction in October of a facility producing paint for shipping containers to replace an outdated plant, the South China Morning Post reports.

The Copenhagen-based Baltic and International Maritime Council (BIMCO) has opened its Shanghai Center. BIMCO has more than 2,500 members globally, controlling more than 15,000 ships and 65% of the world’s tonnage, the Shanghai Daily reports. Torben Skaanild, Secretary General of BIMCO, said the set-up of the center in Shanghai is a milestone for the Council. BIMCO will help China amplify the “voice” of the Chinese shipping industry on the world maritime stage, especially in crafting global shipping standards and trade rules, he said. Shanghai will improve its infrastructure construction to build itself into an international shipping center, as well as develop its shipping service industries that rely on BIMCO, said Zhang Lin, Vice Director of the Shanghai Municipal Transport and Port Authority.