Global seaborne iron ore exports up 2% y-o-y in Jan-Sep'23

• Chinese imports edge up by 7% y-o-y in 9MCY23
  
  
• Australia, South Africa witness marginal decline in export shipments
  
  
• No sign of Chinese steel output cuts; iron ore imports may remain strong
  
  

Global iron ore exports in January-September 2023 increased by over 2% y-o-y to around 1,126 million tonnes (mnt) compared with 1,101 mnt, as per SteelMint data. Exports inched up on a marginal uptick in Chinese primary steel production and higher shipments by key exporters Brazil and India. Chinese iron ore imports, accounting for nearly 78% of the seaborne market in 9MCY23, increased by 7% y-o-y to 878 mnt from 823 mnt in the year-ago period.

Global seaborne iron ore exports had decreased by around 6% y-o-y to 1,447 mnt in 2022 from 1,542 mnt in 2021 mainly due to declining steel production in China in H2CY22.

Leading exporters

Australia, with a share of around 56% of the seaborne iron ore market, recorded total shipments at around 631 mnt in 9MCY23, a marginal decrease of 0.7% y-o-y. A wet March quarter, major port maintenance work and train derailments disrupted supplies slightly. However, the ongoing ramp up of BHP's South Flank, Fortescue's Eliwana Iron Bridge and Rio Tinto's Gudai-Darri iron ore operations is expected to increase supplies in the near term.

Brazil ramped up exports to over 275 mnt in 9MCY23, an increase of 7% on the year. Brazil's largest producer, Vale, saw improved output from most of its mines including S11D and Itabira and Vargem Grande complexes.

While Canada's shipments declined slightly to 39 mnt during the period under review, South Africa's iron ore exports fell by 4% y-o-y to around 40 mnt due to disruptions in railway networks and ports as well as weather-related delays.

The rollback of 50% export duty on iron ore in India, however, resulted in an astonishing 130% y-o-y growth in exports (due to low base) to around 30 mnt in 9MCY23.

Why exports edged up?

*Chinese steel output rises: China produced over 795 mnt of crude steel during the period, SteelMint data show, which is an increase of 2% y-o-y. Notably, around 88% of China's steel production is based on the BF-BOF route, with iron ore being the key ferrous feed. Data reveal that Chinese hot metal production during the period under review increased by 3.5% y-o-y to 675 mnt. So, iron ore imports remained robust. Moreover, scrap consumption in steelmaking declined this year on higher domestic prices in China amid tight supplies.

*Iron ore production falls in China: China's production of run of mine (ROM) iron ore (which has to be processed into concentrates for steelmaking) in 9MCY23 decreased by 5% on the year. This is because of stringent safety inspections in the key mining areas on account of frequent accidents in mines, which impacted production and reinforced dependence on imports. China meets over 80% of its iron ore requirements through imports.

*China iron ore port inventories at 3-yr low: Restocking of iron ore by Chinese steel mills has led to China's portside iron ore inventories falling to their lowest level in three years to around 108 mnt in end September. SteelHome data show that inventories are 15% below historic averages. Fast-paced offtake of portside iron ore by mills kept imports supported.

Outlook

The Chinese government has increased stimulus measures, including the issuance of an extra RMB 1 trillion sovereign debt for post-flood infrastructure reconstruction and the country's parliament has approved a bill to allow provincial governments to front load part of 2024 local bond quotas. So, there are no signs as yet that China is intent on reducing crude steel production in the remainder of 2023 compared to last year. Maybe this is because the government does not want to disturb economic growth momentum.

On the contrary, Mysteel data show that China's BF capacity utilisation rate in late October stood at 90.73%, higher than 87.64% in the year-ago period. With robust steel production and fiscal stimulus boosting steel demand, China's iron ore imports are likely to edge up y-o-y in 2023, which will drive global export volumes.