U-Ming of Taiwan signs largest ever Contract of Affreightment deal; orders two VLOCs from China yard

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U-Ming Marine Transport (Singapore), a subsidiary of U-Ming Marine Transport Corporation, has signed a 25-year Contract of Affreightment (COA) with Vale International, of Switzerland. The COA is the biggest and longest commitment in U-Ming’s history and the total contract value is anticipated to be more than $600 million with a bunker adjustment clause.

The owner has also ordered two 325,000 deadweight tons Very Large Ore Carriers (VLOC) from China’s Qingdao Beihai Shipbuilding Heavy Industry Co to facilitate the contract.

A U-Ming spokesman said today: “U-Ming Marine Transport has long-term relationships with major mining companies around the world and its proven track record of providing reliable transportation services is evident among its international customer base. The signing of this long-term contract has further enhanced the cooperation and relationship between Vale International SA and U-Ming. The COA will commence in 2020 until 2045 for transporting Brazilian iron ore to China. We have been able to secure a bigger portion of long term charters with stabilized revenue and profit for the company.”

In their aspiration to be a leading eco-friendly shipping company, U-Ming has ordered two VLOC ships (325,000 deadweight ton) with a “LNG-Ready” design for retrofitting to “Dual-Fuel” in the future. The vessels are expected to be delivered in 2020. Each vessel will be equipped with a state-of-the-art an ecoefficient main engine, SO2 scrubber features, digital optimization systems, and comply with the International Maritime Organization’s 2020 sulphur cap of 0.5% with effect from 2020. These environmentally responsible vessels adhere to the latest international maritime regulations which provide green shipping to our customers with significantly reduced greenhouse emissions.

U-Ming notes that the dry bulk shipping market recovered significantly in 2017.

The overall Baltic Dry Index (BDI) achieved an annual growth of 70% to 1,145 points. U Ming also said China’s economy grew by about 6.9% last year and overall the performance was better than expected in 2017. China’s value-added industrial output maintained by more than 6% steady growth and the annual growth of total profits earned by Chinese industrial enterprises exceeded 20%. China imported about 1.0814 billion tons of iron ore, a growth of 5.5% year-on-year, in 2017.

China’s iron ore demand has been rising and its import hit a record high in 2017; of which 60% was from Australia and 20% from Brazil. Major mining companies have been increasing their iron ore production capacity to meet China’s demand.

According to Australia official estimates, the world iron ore total export in 2019 will reach 1.378 billion tons, a 7% growth as compared to 2017, of which Vale’s new S11D mine will reach a nominal capacity of 90 million tons per annum by 2020 with an iron content of up to 66.7%. The total iron ore export from Brazil in 2019 is expected to be 10% more than in 2017.

The U-Ming spokesman added: “This COA is contracted to meet the iron ore demand growth especially in China and other developing countries; and with UMing’s prudent management and customer service oriented vision to create a win-win for both parties.”