According to the latest data from BIMCO, Brazil’s iron ore exports from January to August this year are projected to increase by 4% year-on-year. Despite weakening overall demand in China, shipments from Brazil to China are still rising, partially replacing supplies from Australia, Peru, and India.
Filipe Gouveia, Shipping Analyst at BIMCO, pointed out that Brazil ranks second in the global iron ore export market, holding a 23% share, second only to Australia, which holds a dominant 54% share. Currently, 73% of global iron ore exports are shipped to China, with another 11% sold to other East Asian countries. In terms of transportation methods, 89% of global iron ore is transported by Capesize vessels (including VLOCs), and this proportion is as high as 97% for Brazilian ore.
The increase in Brazilian exports has significantly boosted tonne-mile demand, particularly impacting the Capesize market. In comparison, the average voyage distance for Brazilian ore is almost three times that of Australian ore and twice the global average, meaning ships spend more time at sea. Even though global iron ore seaborne volume decreased by 1% year-on-year in the first eight months of this year, global tonne-mile demand still achieved a year-on-year increase of approximately 1%, benefiting from the growth in Brazil’s long-haul routes.
Meanwhile, iron ore exports from Australia, Peru, and India have declined. Australia’s mining activities were affected by extreme weather from January to May, while Peru experienced port operation disruptions in May and June; India’s exports have significantly weakened due to intense price competition and rising domestic demand. Unlike Australia and Brazil, India’s iron ore is mostly carried by Supramax vessels.
On the demand side, China’s iron ore import demand is under pressure. From January to July this year, China’s crude steel production decreased by 3% year-on-year. Although steel exports surged by 11% year-on-year, offsetting some of the pressure, it was still insufficient to counteract the impact of weak domestic demand. The real estate sector crisis continues, construction activity is still contracting, and there remains an unsold inventory of 408 million square meters in the market. The manufacturing and infrastructure sectors performed relatively better, but the official Manufacturing PMI has been below 50 for four consecutive months. Steel production in Japan and South Korea is also showing a downward trend.
Looking ahead, the OECD expects China’s steel demand to continue declining, and overall economic activity in China may also slow down. However, the iron ore market might still see some positive factors to counterbalance the pressure from the demand side. The Simandou iron ore project in Guinea is expected to commence production in November 2025, which will not only expand global supply but also lengthen the average voyage distance. This is expected to lower ore prices and stimulate China to increase imports to substitute for domestic iron ore.
