Shagang enters long-term shipping contract with MOL
Shanghai. October 23. INTERFAX-CHINA - Jiangsu Shagang Group Co. Ltd., China's largest private steel mill, has entered into a 10-year shipping contract with Mitsui O.S.K Lines Ltd. (MOL) for iron ore delivery from Brazil and Western Australia, MOL announced on Oct. 21.
According to the contract, MOL will start shipping iron ore for Shagang from Brazil and Western Australia to Eastern China's Ningbo City in 2011. A new 207,000-ton iron ore carrier will be constructed by Universal Shipbuilding Corp. specifically for this contract, which is scheduled to be completed in late 2011.
Shagang's annual iron ore imports amounted to 16.34 million tons in 2008.
Domestic steel mills sign long-term shipping contracts in order to reduce risks of volatile freight rates. Although the current shipping costs are relatively low, the BDI (Baltic Dry Index), which measures freight rates of raw materials, has increased from around 2,400 points in late August 2009 to 3,001 on Oct. 22.
MOL also announced on Oct. 20 an agreement with major Chinese steel mill Baoshan Iron and Steel Group (Baosteel Group) to strengthen cooperation.