Vale accelerate selling the remaining ore carriers
One side is facing the loss first time in decades, while the speed to sell the remaining Valemax ore carriers, in the end is to reduce transportation costs or are in urgent need of funds financial difficulties, the world's largest iron ore giant CVRD obviously face tremendous pressure.
11 ore carriers leaseback to raise $ 1.1 billion
CVRD on Friday said it will sell the remaining 11 Valemax ore carriers and leaseback to raise $ 1.1 billion. Vale just three quarters of this year to $ 448 million sale of four very large ore carriers to China Merchants Energy Shipping Co., Ltd.
Vale said the key purpose of the sale of the series ore carriers that Brazilian iron ore to reduce transportation costs between businesses and customers in Asia, said the move from the best rent amount provided by the new owner leaseback.
The ship is part of series Vale 35 Valemax ship fleet, approximately $ 110 million per ship. Vale's Valemax ore carriers can help them to compete with major rivals Australia BHP Billiton and Rio Tinto, the world's largest iron ore they are closer to the consumer market, China.
CVRD's iron ore is currently the first time below $ 40 per ton, lower transport costs become a top priority. Vale implementation of this large-scale shipbuilding project starting in 2008, hope through economies of scale, lower transportation costs per ton of iron ore.
The current iron ore prices lowest since 2005, Vale is working with major steelmakers annual negotiations.
CVRD CFO Xiani pointed out that due to the low price of iron ore, CVRD next year will not pay a dividend in order to conserve cash in order to complete their final year of its Carajas iron ore giant comprehensive plan to expand production capacity.
Third quarter production was the highest in a decade first loss
The third quarter of this year, CVRD iron ore production reached 88.2 million tons, the highest ever for the company's single-season production.
But Vale released third quarter results, third quarter net loss of $ 2.117 billion, while net income last quarter $ 1.675 billion, an expansion of 47%. And this is the first loss in a decade. It reported that the main reason for the difference of $ 3.792 billion in the quarter due to the real against the US dollar fell 28%, while the exchange rate last quarter rose by 3%. Market analysts pointed out that the main reason for Vale is undoubtedly huge losses year on year drop in iron ore prices, reduced market demand, but still adverse economic stimulation Vale iron ore. In addition, the sharp devaluation of the Brazilian currency also affected its operations.
China's economic growth "next step" and structural adjustment, the end of the commodities super cycle. Spot iron ore prices fell below 40 US dollars per ton last Friday psychological level, the largest consumer of Chinese steel demand greatly reduced, iron ore prices have been at their lowest level since the beginning of 2008 the spot market pricing. According to the annual price of iron ore has reached 10-year low, the price is only 2011 high of about $ 200 per ton in the fifth.
Therefore, although the number of iron ore shipped to China's still growing, but the sharp decline in prices has significantly damaged the Vale of the income statement. The emergence of a substantial loss in the third quarter, the first time this decade that the company suffered a similar loss.
While Chinese steelmakers "appetite" has no original so good. But more recently we have heard a number of domestic steel mills shut down or even collapse. China's crude steel production in the first half of 2015 410 million tons, the first time in nearly 20 years of decline.
Vale CEO fee Moray recently in an interview, said, "I personally believe that the Chinese government is currently in the steel industry adjustment, the current is also faced with the problem of excess capacity." "But the entire industry, it's just adjustment of an industry, the demand After adjustment, we do not think that is down. "
To this end fee Moray represents Vale is considering expanding the scale Valemax fleet, will likely increase the number of Valemax doubled to an amazing 64. Shortly thereafter, Vale began and CMES, COSCO cooperation signed iron ore contracts of affreightment, and to charter the way in China-made dozens of ships Valemax ore carriers.
However, this adjustment requires much time, how much adjustment, fees Moray probably not sure. The first loss in the third quarter only just beginning, the sale of assets in cash reserves for the winter may be the Vale real thoughts. As for the future will be to double the number of Valemax reach 64, maybe just Vale of China's future, "better vision", otherwise who would take over those ore carriers yet.