Nippon Steel to Consider More Valemax Shipments to Lower Costs

Nippon Steel & Sumitomo Metal Corp. (5401), Japan’s top steelmaker, will consider using more Valemax carriers to receive ore shipments to lower expenses and mitigate the impact of rising raw material prices.

“Our mission is to minimize costs and we have been thinking of ways to do so after a surge in raw material prices,” Shinichi Fujiwara, executive officer at the Japanese steelmaker, told reporters at an event to mark receiving one of the ships at a mill near Tokyo. Use of more Valemaxes “is one option.”

The arrival of Vale Brasil at the steelmaker’s Kimitsu works extends the number of ports that can accept Valemaxes built by Vale SA (VALE3) to seven globally, Tokyo-based Nippon Steel said today in a statement. The ship, 362 meters (1,188 feet) long and with a capacity to carry 402,000 metric tons of cargo, is twice as big as capesize carriers.

Nippon Steel buys about 70 million tons of iron ore a year, of which 25 percent comes from Vale, the company’s second- biggest iron ore supplier after Rio Tinto Group, Fujiwara said. The steelmaker is considering receiving iron ore carried by Valemaxes at other domestic mills, he said.

Vale Brasil first docked at the steelmaker’s Oita steelworks last week to unload half of its cargo before proceeding to Kimitsu, Nippon Steel said today. The first Valemax carrier to Japan arrived at the Oita mill in June.

JFE Steel Corp., Nippon Steel’s closest domestic rival, received one of the carriers to take delivery of iron ore at a port in the Philippines, the company said Oct. 18.

Vale, the world’s biggest iron ore supplier, is building a fleet of 35 Valemax carriers to lower its freight costs and compete with Australian miners, which have the advantage of proximity to China, the biggest customer.

To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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