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STX Pan Ocean scoops $5.84bn transport deal from Vale

Seoul: South Korean dry bulk carrier STX Pan Ocean Co. Ltd. said Monday evening that it has entered into a US$5.84 billion long-term contract with Brazil-based mining company Vale S.A. to transport iron ore. Under the deal, the company will annually ship 12 million to 13 million metric tons of iron ore over the next 25 years for Vale.
The contract is the largest order for STX Pan Ocean and is expected to provide a boost to the company, which has reported losses in the first two quarters of the current year. The company, like other shipping lines, was hurt by a drop in freight rates amid the global economic downturn. STX Pan Ocean noted that it was in need of a large amount of cargo to generate new profits during the times of extreme recession in shipping industry.
The deal which runs through the fourth quarter of 2037, also enables STX Pan Ocean to lock in rates amid rising competition. The company said that its main objective for entering into the consecutive voyage contract, or CVC, is to secure a stabilized source of revenue and profit.  [29/09/09]

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