Pan Ocean could see US$13b fall in sales from long-term Vale shipping contracts

Pan Ocean said the drop in the sales amount is due to bunker fuel oil prices.
Pan Ocean said the drop in the sales amount is due to bunker fuel oil prices.PHOTO: BLOOMBERG

SINGAPORE - Singapore-listed bulk carrier Pan Ocean said the sales amount for its shipping contracts with Brazilian mining giant Vale International will drop to about US$45 billion from US$58 billion due to bunker fuel oil prices.

Pan Ocean, which is listed in Singapore and South Korea, provided that estimate as it announced in an exchange filing on Wednesday (Jan 2) that both companies have agreed to change previously agreed long-term consecutive voyage contracts dated Sept 21, 2009, to contracts of affreightment (COAs).

These contracts are for the transportation of about 238.4 million tons of iron ore from Brazil to China over roughly 19 years.

The change was made at the request of Vale, and the existing terms and conditions regarding freight, cargo quantity, and the others contractual terms remain the same with no material impact to Pan Ocean’s revenue.

The revised contracts were issued on Dec 31, 2018.