NYK signs ore-shipment deal with Baoshan

Nippon Yusen Kaisha (NYK) has tied up a long-term transport contract with the China?s largest steel producer, Baoshan Iron and Steel. Under the terms of the deal, NYK will transport about 600,000 tonnes of iron ore a year from Brazil to the Baoshan terminal near Shanghai and the contract will start with the initial shipment at the beginning of 2006 and last 12 years.

Although NYK will service the contract with existing tonnage, it has already ordered a 200,000DWT Capesize bulk carrier from Japan’s Universal Shipbuilding at a cost of about $60 million with delivery scheduled for the end of 2007 or early 2008.

This iron ore contract follows on from a 10-year deal signed between Baoshan and NYK for iron ore shipments from Western Australia. The steel maker is also close to clinching long-term deals with two European shipping companies, i.e. UK?s Zodiac Maritime Agencies and Belgium’s Kleimar.

Industry sources believe the boom in iron ore shipments is only just beginning after the world’s three biggest iron ore producers announced plans last week to spend $5.3 billion over the next four years to increase output. The three firms, Companhia Vale do Rio Doce of Brazil, Britain’s Rio Tinto and Australia’s BHP Billiton, are confident China’s surging economy will drive demand for iron ore and steel.