Brazil’s Vale said it has increased access of its “Valemax” iron ore carriers to Asian ports and has even docked one of its ships in China where a ban on the giant vessels has been in effect for more than a year. The Vale Malaysia docked at China’s port of Lianyungang on April 15 and left on April 17 after unloading its cargo. The 402,285 DWT ship, one of the world’s largest bulk freighters, was only partly loaded. The company is counting on the giant ships to help slash costs of shipping ore to China, the world’s largest iron ore market, and compete with Australian rivals BHP Billiton and Rio Tinto, whose mines are closer to Chinese customers. China banned the Brazilian miner’s mega ships early last year over alleged safety concerns. Most of the vessels were built in China with Chinese government finance. The ban was also made to protect China’s own ocean-freight industry as a glut in vessels dragged down global shipping rates. No bulk cargo vessels of more than 300,000 DWT have clearance for Chinese ports under the ban. Before the latest port call, the last time a Valemax entered a Chinese port was in late December 2011 when the 388,000 DWT Berge Everest called at the port of Dalian. The 35 Valemax vessels afloat or under construction can reduce transport costs by up to a third and produce far fewer greenhouse gases. Vale owns part of the fleet and has given third-party owners long-term contracts to ship ore with the other vessels. In April, Vale opened a second floating iron ore distribution station in the Philippines to keep the Valemax ships in business. The stations, floating bulk freighters with ore-moving equipment, can transship ore from the Valemaxes to smaller vessels for the final trip to Asian ports. Vale is also working to open new ports to Valemax ships in Japan and Korea.

China Shipping, China’s second-biggest shipping group, is set to pay USD2.2 billion on a fleet of gas carriers and ultra-large container ships capable of carrying 18,000 TEU. China Shipping Container Lines (CSCL) will become only the second box line globally, after the Danish Maersk, to operate the 18,000 TEU vessels, which will be the biggest container ships in the world. Maersk is due to take delivery of its first 18,000 TEU Triple-E ship on June 28. South Korea’s Hyundai Heavy Industries has won the bid to build the container ships and discussions are taking place between CSCL and Hyundai to finalize shipbuilding contracts for five vessels. China Shipping management agreed to the order at a board meeting in April. The container ships will be deployed on the Asia-Europe route. Martin Rowe, Managing Director of Clarksons Asia in Hong Kong, estimated each ship would cost in “the region of USD130 million to USD140 million”, depending on specifications. Hyundai has already set up a China Shipping group within its container ship sales team to handle its involvement in the project. China Shipping Development, in partnership with Japan’s Mitsui OSK Lines, has also confirmed a USD1.51 billion order with Shanghai’s Hudong-Zhonghua Shipbuilding for six liquefied natural gas (LNG) carriers. The ships, with a capacity of 174,000 cubic meters, will be used by Sinopec to transport LNG from its Australia Pacific LNG project in Queensland to China, starting in 2016. China Shipping and Mitsui OSK Lines will provide 20% of the financing for the ships, while a Sino-Japanese banking syndicate including ICBC, Bank of China, Export-Import Bank of China and Sumitomo Mitsui Banking will provide the remaining 80%, equivalent to USD1.2 billion. China Shipping narrowed its financial loss to CNY689 million in the first quarter of this year from CNY1.45 billion a year ago. In 2012, the company delivered a profit of CNY523 million, compared with a loss of CNY2.74 billion the previous year.

Hongkong United Dockyards, jointly owned by Swire Pacific and Hutchison Whampoa, has stopped taking ship-repair business but Swire Executive Director John Rae-Smith denied industry speculation that ship-repair operations were being closed and equipment sold. He said that “HUD has temporarily stopped taking bookings” because its floating dry dock needed repairing. “A large amount of steel deck plate needs to be replaced by the end of the year. This is normal for a 20-year-old dock, but it does mean that the yard can’t accept third-party business while the work is being done,” he added. The company’s key customers include Star Cruises and the Hapag-Lloyd container line. “HUD is definitely still in the ship-repair business. We have no plans to get out of it and indeed are looking at seeing what opportunities the downturn in the maritime business presents,” Rae-Smith said. HUD made a pre-tax loss of HKD61 million last year on ship repairs. HUD management floated a plan last year to build a second dry dock to handle larger container ships that would double the size of the workforce, but the scheme has yet to be approved by HUD’s joint Swire and Hutchison board. The existing facility can repair 35 to 40 ships a year but HUD estimated it was losing 10 ships a year because it was unable to repair larger vessels. The firm is also facing a shortage of skilled workers, including welders, which would be exacerbated by the second-dock project. HUD hoped to solve the problem by being allowed to import foreign workers, the South China Morning Post reports.

Cosco (Lianyungang) Shipyard Co, a joint venture between Jiangsu Lianyungang Port Corp and Cosco Shipyard Group Co, is to be dissolved after steep losses incurred during the industry downturn. The joint venture was set up in early 2008 with a registered capital of CNY180 million. The company is engaged in the construction, design, manufacture and repair of steel structures for vessels. Shanghai-listed Lianyungang Port owns 40%, and Cosco Shipyard has a 60% stake in the business. The company posted a CNY44.98 million profit in 2008, and remained profitable in 2009 and 2010, but it registered a CNY30.28 million loss in 2011, which widened to CNY80.98 million in 2012, according to Liu Kun, Securities Representative from Liangyungang Port. Orders are drying up for domestic shipyards and freight rates keep diving, without any signs of imminent recovery in the industry. Analysts warn that more medium-sized shipbuilding companies are likely to close as the industrial slowdown continues. Liu Pan, Industrial Analyst with Xiangcai Securities, said that consolidation was inevitable. Cosco (Lianyungang) contributed a CNY32.39 million loss to Lianyungang Port’s annual figures in 2012, its only money-loosing subsidiary. South Korea’s STX Offshore & Shipbuilding Co said last month it is planning to sell operations in China to cut mounting debts. Its Chinese arm, STX Dalian Shipbuilding Co, is seeking fresh capital through selling a 40% stake in the business. It was set up in 2007 with investment totaling USD1.5 billion, the China Daily reports.

The 12.2% slide in Hong Kong’s container throughput last month to 1.73 million TEU underpinned a structural problem exacerbated by the Hong Kong dockers’ strike, according to Hung Tam-yuen, Chairman of Turbo Maritime. The company, which has operated barge services to mainland cities for more than 20 years, is worried that an increasing number of exporters will switch to ports in Shenzhen and Nansha in Guangdong province. Buyers in the United States and Europe were told to use mainland ports to avoid any disruptions caused by the strike last month, Hung said. The 40-day strike caused a backlog of containers at the dock that needed seven days to clear. More than 60% of the containers handled in Hong Kong carried goods made in Guangdong province. Manufacturer and buyers use Hong Kong ports mainly for the perceived higher efficiency, but these advantages are disappearing as mainland ports have modernized over the past 10 years. “When they find that the difference in efficiency is not that much between Hong Kong and Shenzhen, they will switch to the mainland for good,” Hung said. Last month, Hung’s company moved 8,000 TEU, down 20% from a year ago. Throughput at the Kwai Tsing container terminals decreased 10.7% while the river trade terminals recorded a 17% decline. Shenzhen Port, on the other hand, handled 1.8 million TEU, an increase of 2.2%. Guangzhou Port recorded a 0.2% rise to 1.3 million TEU. “It is more of a structural problem than a one-off problem for Hong Kong losing shipments to Shenzhen. The infrastructure of our terminals is lagging our rivals across the border,” said Peter Wong, Managing Director of DP World Asia Pacific, which operates Terminal 3 in Hong Kong, the South China Morning Post reports.