- China’s iron ore imports up 7% year-on-year since June.
- Steel production remains subdued, with inventories at an eight-month high.
- Uptick in buying linked to public spending and manufacturing recovery.
- Capesize freight rates rise 5%, driven by higher iron ore shipments.
China’s iron ore imports have climbed sharply in recent months, rising 7% year-on-year since the end of June, according to BIMCO’s Shipping Analysis Manager, Filipe Gouveia. The increase follows a largely stable first half of the year. Despite stronger import volumes, steel production in China continues to lag, resulting in rising portside inventories that recently reached their highest level in eight months.
Expectations of Economic Stimulus Drive Purchases
The recent spike in imports appears to be underpinned by expectations of increased public investment and a rebound in manufacturing activity, reflected in China’s Caixin PMI. These developments also spurred a recovery in iron ore prices after a period of weakness between April and July.
However, Chinese steel production declined 3% year-on-year in Q3 2025 and likely remained weak into Q4. The ongoing property sector crisis continues to weigh heavily on steel consumption, as construction activity shows little sign of revival.
Freight Market Benefits — For Now
According to Gouveia, the surge in iron ore shipments has provided a lift to the dry bulk market. Capesize freight rates have seen a 5% year-on-year increase in the Baltic Capesize Index since June. Yet, he cautions that without a rebound in steel output, growing iron ore inventories could soon dampen import momentum and freight demand.
Iron Ore Trade Flows Dominated by China
China remains the world’s largest importer of iron ore, accounting for 74% of global shipments. Of these, 63% come from Australia and 22% from Brazil, with the majority transported aboard capesize vessels, which make up 57% of the segment’s tonne-mile demand.
Outlook: Iron Ore Imports May Outperform Steel Demand
Looking ahead, the World Steel Association projects a 1% decline in Chinese steel demand in 2026, citing weak manufacturing and infrastructure sectors. While growing steel exports may offer partial support, rising trade barriers could limit export growth and prevent full offsetting of weaker domestic demand.
Nevertheless, iron ore imports may continue to perform better. Increasing global mining capacity is heightening price competition with China’s lower-grade domestic supplies, favoring imports. Additionally, the upcoming Guinean Simandou project could ship up to 40 million tonnes of iron ore in 2026, extending average voyage distances and boosting tonne-mile demand.
“Although the outlook for China’s steel production appears weak, iron ore imports could fare better,” Gouveia concludes. “Growing mining output and new long-haul supply sources such as Simandou may sustain trade volumes and tonne miles in the coming years.”
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Source: BIMCO
