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Shipping Dispute Between China and Vale (NYSE:VALE) Not About Vessels

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China-built ships not allowed in Chinese ports? Like a lot of things having to do with China, there's more to the story.

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Lax believes business between China and Vale won't stay frozen for long.

I suspect that they will reach a deal. China has a tremendous need for ore and steel to continue building out their infrastructure and they certainly wouldn't be doing themselves a favor by making it impossible for one of their three biggest suppliers not to be able to participate in the market and then be left at the tender mercies of BHP and RIO Tinto.

Then, there is also the matter of Chinese demand.

Lax says, "There are all sorts of questions about what China's steel stocks actually are today, and whether a lot of the steel that's supposed to be in Chinese warehouses is actually there. To the extent that its not, they're going to need that iron ore more critically."

Twitter: @brokawbrokaw

No positions in stocks mentioned.
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