China drives 5% increase in iron ore shipments despite weak deman

“Global iron ore shipments have risen 5% y/y during the first 12 weeks of 2026, supported by stronger Chinese import demand. However, this increase has not been matched by Chinese steel production which fell 4% y/y during the first two months of the year. As a result, the additional supply has boosted portside inventories, which reached a record high of 179.5m tonnes on 12 March,” says Filipe Gouveia, Shipping Analysis Manager at BIMCO.

Steel production in China has been on a downward trend since 2023, pressured by falling domestic demand. China’s property sector crisis has triggered a decrease in new real estate construction, while higher steel exports have only partly offset the decline in domestic consumption. China is the destination of 74% of global iron ore shipments. Iron ore is used in the production of new steel in blast furnaces, the main production method in China.

Iron ore imports are competitive with domestic supplies and can replace them. Imported ore is typically of higher quality, allowing mills to improve productivity and reduce coke consumption. However, although higher imports led to a 3% y/y decrease in Chinese domestic mining in 2025, mining has risen 2% y/y during the first two months of 2026, further boosting China’s iron ore supply.

“The increase in iron ore shipments has supported dry bulk freight rates, especially in the capesize segment, which transports 90% of global iron ore cargoes. This segment has not only benefitted from strong demand for iron ore and bauxite cargoes, but also from low fleet growth. Currently, iron ore accounts for 73% of the segment’s tonne mile demand,” says Gouveia.

Australia, the largest iron ore exporter in the world, has been the main beneficiary of the stronger Chinese import demand, boosting its exports by 10% y/y so far this year. Conversely, Brazil, the second largest exporter, has only increased its shipments by 2% y/y since high rainfall disrupted mining operations. Among smaller exporters, the largest increases in export volumes have occurred in Peru, Liberia and Guinea, while in Ukraine export volume has plunged 66% y/y.

“The Iran war is having a negative but limited direct impact on the iron ore trade. Shipments via the Strait of Hormuz only account for 2% of tonne mile demand, while Oman accounts for an additional 2%. However, the war has reduced the availability of diesel, which could impact mining operations in countries such as Australia and South Africa as they rely on diesel imports. Furthermore, the economic impacts from higher energy prices could further challenge domestic steel demand in China,” says Gouveia.

Source:BIMCO