Brazil's Vale S.A. is one of the top three suppliers of iron ore to China. In 2007, Vale began working with Chinese shipbuilders to design the large, iron ore-specific Valemax carriers. Valemax ships would reduce fuel requirements an estimated 35 percent per ton of iron ore compared to Capesize ships. This would also reduce emissions levels. The vessels were also designed to offload cargo roughly twice as fast and, if allowed to dock directly at ports, reduce Vale's shipping times from 40 to 35 days. Over the following year, Vale commissioned a fleet of 35 Valemax vessels, 24 of which were to be built by Chinese state-owned shipbuilders. To date, 30 of 35 planned ships are complete and operating regularly, accounting for roughly one-third of Vale's Asia export capacity.
In December 2011, the first Valemax vessel, a carrier operated by Berge Bulk with a carrying capacity of 350,000 deadweight tons, successfully unloaded at China's port of Dalian. But China's Capesize operators, especially state-owned shipper China Ocean Shipping Group Co., were fearful of losing market share to Vale at a time of falling demand and overcapacity. Coupled with Beijing's concerns over growing resource supply chain vulnerabilities, this led the Ministry of Transport to issue Circular No. 13 in January 2011 — a policy that repealed the discretion of individual ports to determine the safety of berthing larger vessels and explicitly barred ships with a capacity of 350,000 deadweight tons or more from docking at Chinese ports.
Vale, however, was relatively insulated from the immediate impacts of the ban. The company benefited from the high ore content of its product relative to Australian and especially Chinese iron ore, bolstering per unit returns. Iron ore spot prices also rallied in the second half of 2012, as the Chinese government loosened credit controls and other restrictions on property development following a round of extreme tightening between late 2011 and early 2012. The temporary spike in prices did not reach the peak levels of 2010-2011 but provided a buffer for Vale's profit margins and partially offset losses due to the ban. The start of operations at a new floating transshipment station in the Philippines' Subic Bay, designed specifically for Valemax vessels en route to major East Asian consumers, also aided Vale's position in China. Vale has since added a second floating transshipment station in the Philippines and is developing a third in Malaysia.
