Global iron ore exports rise 5% in 9MCY'24. Know why?

• China restocking, stimulus measures boost demand
  
  
• Key global miners see higher output in 9MCY'24
  
  
• Iron ore may ride likely global recovery in CY'25
  
  

Morning Brief: Global iron ore imports recorded a nominal growth of around 5% to 1,201 million tonne (mnt) in the January-September, 2024 (9MCY'24) compared to 1,149 mnt seen in the same period in 2023.

Australia was the largest exporter with 646 mnt, up 2% y-o-y followed by Brazil with 291 mnt, a rise of 6%. South Africa was at third spot with 46 mnt, showing a 4% increase in this period.

What factors impacted global iron ore imports in 9MCY'24?

• China's iron ore rides restocking, stimulus measures: China, the largest guzzler of this raw material, saw its imports of the same going up 5% in 9MCY'24 to 920 against 878 mnt in the same last calendar. Since its consumption levels are colossal, even a slight 5% increase impacts the overall trade. A few factors impelled this slight increase. One was the restocking frenzy ahead of the Golden Week holidays from 1-7 October. Secondly, because of this active buying, portside stocks depleted, further creating room for imports. Thirdly, the latest set of stimulus measures, which included booster shots for the real estate sector, created a sudden upsurge in demand for finished steel, fuelling iron ore demand in turn. Lastly, manufacturing and automotive showed an uptick in 9MCY'24. Y-o-y, over January-September, 2024, manufacturing was on a fairly stronger wicket with a 9.3% growth in investments against 6.6% in the corresponding period last year Automobile production and sales revved up 2% and 3% respectively y-o-y in 9MCY'24.
  
  
• Southeast Asia demand boosts Australia shipments: Australia's iron ore and pellet export shipments rose a marginal 2% y-o-y to 644 mnt in 9MCY'24 compared to 629 mnt in 9MCY'23 because of a few factors. 1) Increased steel production in Southeast Asia, particularly Indonesia and Vietnam, which expanded their blast furnace capacities. The rise in steel output drove up demand for raw materials like iron ore, contributing to the higher export volumes. 2) Positive macro-economic developments also played a role in supporting the iron ore market. The US Federal Reserve's decision in mid-September to cut interest rates for the first time in four years improved global market sentiment, enhancing trade activity. 3) Additionally, the resumption of steel production in northern China contributed to a favourable outlook, further boosting Australia's iron ore exports.
  
  

Moreover, Australia's BHP Group recorded a 4% increase in production in 9MCY'24 despite Q3 (June-September) production slipping 7% q-o-q.

• Brazil's Vale puts up stellar performance: Where Brazil is concerned, its exports of the ore rose the second-highest this so far this year to 37 mnt in September, mainly propelled by its largest miner, Vale, recording a 5% increase in iron ore output over January-September 2024 to around 242 mnt against 232 mnt in the same period last year. Total production in Q3CY'24 was also up 13% to 91 mnt from 81 mnt in Q2CY'24. This rise was attributed to strong performances at key mines like S11D, Itabira and Brucutu while shipments from the Ponta da Madeira Port hit a quarterly high since 2021, totalling 51 mnt, driven by improved operational stability. Two of Itabira's plants experienced enhanced performance due to reduced maintenance downtime, since such activities were concentrated in the rainy season in the first semester. Additionally, Brucutu's highest output since 2019 was driven by the resumption of three wet processing lines last year and the commissioning of a fourth line in September this year.
  
  
• Higher crude steel output boosts India's ore production: India, the 5th-largest iron ore producer, saw volumes rising 5% in 9MCY'24 and 10% over H1FY'25 (April-September) this year. The increase was mainly driven by the 4% increase in crude steel production in H1FY'25. Since around 90% of India's steel-making is iron ore-based, increased crude steel output gave it a fillip. Secondly, India's sponge and pellet production also increased over April-August, further boosting iron ore usage.
  
  

Thirdly, India's mineral block auctions boosted output with many green-field mines coming up for production.

However, India's iron ore exports dropped 15% y-o-y in H1FY'25, underscoring that much of the material was diverted towards domestic use.

Outlook

The global iron ore sea-borne trade is likely to stay buoyant as major global miners like Rio Tinto and BHP kept their production guidance intact while Vale increased its, for CY'24. India's production is expected to increase too.

As per worldsteel's Short Range Outlook, October 2024, "Despite the current challenges, there are reasons for cautious optimism regarding a potential recovery in global manufacturing in 2025. The resilience of the global economy, easing of financing conditions, pent-up demand and increases in real income seen in major economies such as the Eurozone and Japan should support a recovery in private consumption and investments, and hence a recovery in global manufacturing activity in 2025."

This outlook should augur well for the seaborne iron ore trade next year.