Vale won’t reopen Brazil port until February

Prolonged delay impacts iron ore, freight prices

By Dave Hannon -- Purchasing, 1/9/2008 10:31:00 AM

World mining giant Vale of Brazil says it can’t reopen a damaged port  until February, news that has prompted spot iron ore prices to spike in China, the world’s biggest consumer, and pushed ocean freight rates higher in certain lanes. In mid-December, Vale (formerly CVRD) announced it would suspend iron ore shipments from Brazil to China after the port was damaged. The most recent news that the port will not be able to ship out from the port until February    

“Spot prices will go higher if Vale cuts supplies,'' Gao Feng, an iron-ore purchase official at Taiyuan Iron & Steel Group, China's biggest stainless steel producer, says this week in a Bloomberg report. However, Wang Liqun, head of raw-material purchasing at Baosteel, says the Beijing-based steel company hasn't received any notice from Vale about any supply reductions.

However, the prolonged port closure is also pushing up freight rates for materials out of Brazil, buyers tell Purchasing.com. Bulk ocean freight rates remain high, although they have come off a peak in mid-December. (A steel buyer says that freight charges for steel products from Brazil have risen by $40/ton in recent days, for example, to $110/ton for deliveries to the Gulf Coast.) Higher freight rates have driven some of the world’s biggest mining firms to buy their own vessels, as Rio Tinto did recently.

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