Valemaxes could spell Capesize market’s doom

The first of the new Valemax very large ore carriers (VLOCs) loaded 400,000t of iron ore at the Brazilian port of Tubarao this week — spelling possible doom for Capesize shipowners. The vessel, which at over 300metres long is bigger than most skyscrapers, is part of Brazilian iron ore producer Vale’s plan to shift nearly all of its output away from the spot freight market.

A total of 36 of these behemoth 400,000 deadweight tonne (dwt) Valemaxes are already on the market, carrying 1.6mn tonnes each every year between Brazil and either China, Oman or Malaysia — from where it is shipped on to China.

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Caught between the devil and the deep blue sea

Tanker owners are looking to rejuvenate their fleets.  Nothing new, I hear you say, ordering new ships is what owners do.

But talk of a nascent consolidation in the sector suggested things could be different this time around. Shipowners with strong enough balance sheets could be looking at other ways to expand, rather than ordering new vessels and adding to an oversupplied market.

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Shipowners wait for the other shoe to drop

You’d forgive shipowners for feeling a little uncertain about their fuel bills at the moment. Last year they faced apocalyptic warnings about the rise in costs to come as European and North American regulators cut sulphur limits for bunkers, but then oil prices collapsed. Many are now left wondering when they’re going to start feeling the financial impact of the new regulations.

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