Iron ore shipment slump weighs on dry bulk shipping
Global iron ore shipments have dropped 7% year on year in early 2025, driven by supply disruptions and weakening Chinese demand
Iron ore — key to capesize demand — faces uncertain prospects amid sluggish steel consumption and trade tensions
GLOBAL iron ore shipments have fallen 7% in the first seven weeks of 2025 compared with the same period last year, inflicting pain on dry bulk freight rates.
The decline was being driven by supply disruptions in key exporting countries, coupled with weakening Chinese demand, said BIMCO analyst Filipe Gouveia.
Australian iron ore cargoes have been hit hardest, dropping 10% versus the previous year. Shipments from Brazil have also weakened by 5%.
The relatively stronger Brazilian volumes were increasing average sailing distances, but overall tonne-mile demand was still estimated to have fallen 6% year on year, said Gouveia.
The weakness intensified this past week when a cyclone forced Australia’s Port Hedland, the largest iron ore export terminal, to close for three days. This contributed to Australian shipments plummeting 55% compared to the same week in 2024.
Brazilian exports have also slowed recently due to a fire at Vale’s Port Tubarão facilities. Over the previous weeks, global iron ore shipments declined just 1% annually.
The iron ore shipping slump has dragged down dry bulk freight rates.
In the year to date, the Baltic Dry Index has averaged 44% lower than 2024. For capesizes, which carry most iron ore cargoes, rates have plunged 55% versus last year.
Gouveia explains iron ore accounts for 75% of capesize volumes and 71% of tonne-mile demand. Therefore, large fluctuations in iron ore shipments directly affect capesize rates.
In China, weak domestic steel demand and production are concerning. Although Chinese steel exports have risen 44% annually, this has likely not fully offset weaker domestic consumption.
Iron ore inventories at Chinese ports have also remained high since July 2024.
Steel demand outside China may prevent further declines, but risks remain due to trade tensions.
Tariffs on Chinese steel products could slow export growth and weaken output in major iron ore importers like Japan and South Korea, Gouveia said.
“Lastly, uncertainty remains regarding the strength of the Chinese economy which could greatly impact global iron ore import demand,” he added.
