CHINA'S steel industry supports Brazilian mining giant Vale SA's mega ships if it could lead to lower iron ore prices, the China Iron and Steel Association said yesterday.

Vale is building the so-called very large ore carriers, known as Valemax, to better compete with Australian miners Rio Tinto and BHP Billiton in supplying China with the steel-making ingredient. Vale's ore for China has to travel three times the distance as ore from Australia.

"Chinese steel companies hope that transport costs will fall and that iron ore prices will fall," said Zhang Changfu, secretary-general of the association. "If this (the Valemax) is good for that, I would support it."

Vale is building a fleet of 35 Valemax carriers, each with a cargo capacity of up to 400,000 tons. Shipbuilders in China and South Korea are building them for the company.

But the Ministry of Transport's ruling in January last year bans dry bulk ships as huge as the Valemax from docking at Chinese ports because of lobbying by the shipping industry which cited the potential impact on domestic loss-making shippers.