Baosteel and COSCO partners in iron ore shipment

Baosteel and COSCO partners in iron ore shipment

Insatiable steel demand from China, as a main trigger of many difficulties which are still being experienced in the iron and steel industry, caused raw material shortages worldwide plus brought freight rates to pretty high levels during the last six months of last year, with Brazil route which rose to $35-40 per ton. According to news from the industry, Chinese steel producer Baosteel Group Corp formed a partnership with China Ocean Shipping (Group) Co (COSCO) in order to secure raw material supply to the company. Baosteel requires procuring around 30 million tons of iron ore this year. Besides, Baosteel will be able to control costs in terms of transportation through this partnership. Additionally, the two companies will jointly establish a terminal with a capacity of 360'000 tons near Baosteel in Shanghai, while COSCO will build up a bulk carrier with same capacity for iron ore transportation from Brazil to Baosteel. Further details on projects, such as investment spending, will be announced soon. In line with company's strategy, Baosteel is going to establish a joint venture steel plant in Brazil worth 2.5 billion$ with CVRD, world's leading iron ore miner.