Business, Freight News, Sea

Iron Ore Shipments Fall 7% Amid Disruptions

[ February 24, 2025   //   Gary G Burrows ]

Global iron ore shipments fell 7 percent year over year, during the first seven weeks of 2025, amid supply disruptions and weak Chinese import demand, international shipping association BIMCO said.
Australian cargoes have fared the worst, down 10 percent year over year, while shipments from Brazil weakened percent. Comparatively stronger Brazilian shipments are boosting average sailing distances, but tonne-mile demand is nonetheless estimated to have taken a 6 percent fall, said Filipe Gouveia, shipping analysis manager at BIMCO.
Weakness of iron ore shipments intensified in mid-February, as a cyclone forced Australia’s largest iron ore port to close for three days, causing Australian shipments to drop 55 percent year over year. Brazilian shipments have also slowed, partly due to a fire in Vale’s facilities in port Tubarão.
The decline in iron ore shipments has contributed to a slump in freight rates. The Baltic Dry Index, or BDI, has fallen as much as 44 percent. “The capesize segment has performed even worse, with rates taking a 55 percent hit,” Gouveia said.
Iron ore, one of the largest dry bulk commodities, is primarily transported by the capesize segment, accounting for 75 percent of its volumes or 71 percent of its tonne-mile demand. As such, any large fluctuation in volumes directly affects the segment’s freight rates. Besides iron ore, capesizes also transport coal and bauxite. Shipments of these commodities on capesize ships have been more stable.
Demand is a concern, as domestic Chinese steel demand has been weak and steel production may have continued to fall. Although Chinese steel exports on dry bulk carriers have risen 44 percent, this has likely not been enough to fully compensate the weaker domestic demand. Lastly, iron ore inventories in Chinese ports have remained largely stable and at a high level since July 2024.
China is the destination of 74 percent of iron ore shipments, with an additional 10 percent going to Japan and Korea. So far in 2025, import demand from these two countries has also fallen 8 percent. Both countries are steel exporters and have been negatively impacted by higher competition from China at home and abroad, leading to lower steel production.
“We expect that growing steel demand outside of China could keep iron ore shipments from falling compared to 2024 levels, but the outlook remains cloudy,” Gouveia said. “Tariffs on steel products, particularly those from China, have increased. This could cause steel export growth to slow and weaken production by key iron ore importers. Lastly, uncertainty remains regarding the strength of the Chinese economy which could greatly impact global iron ore import demand,” Gouveia said.

Tags: BIMCO