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Dry Bulk Market: Weaker Chinese Demand Dampens Brazil’s Iron Ore Exports

China’s slowdown has had a negative impact in Brazil’s iron ore exports. In its latest weekly report, shipbroker Banchero Costa said that “global iron ore loadings in the full 12 months of 2021 were up +0.7% y-o-y to 1,555.3 mln t, according to vessels tracking data from Refinitiv. This was marginally higher than the 1,526.0 mln tonnes in the 12 months of 2019, a year which was affected by the Brumadinho dam disaster. It was however still slightly below the all time record 1,557.3 mln tonnes in the 12 months of 2018.

According to the shipbroker, “so far in 2022, iron ore trade softened again, primarily due to weaker demand from China. In Jan-May 2022, global iron ore loadings declined by -2.6% y-o-y to 606.0 mln tonnes, from 622.0 mln tonnes in the same period of 2021. Exports from Australia increased by +0.1% y-o-y in Jan-May 2022 to 356.4 mln tonnes, just a little below 2018 levels, which was the most recent record high. Exports from Brazil, on the other hand, declined by -6.2% y-o-y so far this year to 124.7 mln tonnes, from 132.9 mln tonnes in the same period last year, although they were still higher than in 2020 and almost identical to 2019. Demand is weighted down by a weakening economy in China, with iron ore imports into the country down by -5.8% y-o-y to 428.6 mln tonnes in the first 5 months of 2022”.

Source: banchero costa &c s.p.a

Banchero Costa added that “on the other hand, the European Union is seeing a revival, with imports up +7.8% y-o-y to 36.4 mln tonnes in the same period. Brazil is currently the second largest exporter of iron ore in the world, after Australia. Brazil now accounts for 20.6% of global iron ore shipments, after Australia’s 58.8%. South Africa is third with just a tiny 3.9% share. In the 12 months of 2021, Brazil exported 346.9 mln tonnes of iron ore, which was a +3.8% increase yo-y, from a low of 334.2 mln tonnes exported in the full year 2020. This was also higher than the low 340.5 mln tonnes loaded in 2019. It was however significantly below the 386.9 mln t exported by Brazil in 2018, or the 378.7 mln t in 2017”.

Meanwhile, “in the first 5 months of 2022, activity softened again due to supply and logistical issues, with iron ore exports from Brazil declining by -6.2% y-o-y to 124.7 mln tonnes, from 132.9 mln t in JanMay 2021. This was almost at par with preCovid levels of 124.9 mln tonnes in Jan-May 2019 but well below the 144.2 mln tonnes in Jan-May 2018. Looking at major loading ports for iron ore in Brazil, we have Ponta da Madeira (169.6 mln tonnes in 2021), Itaqui (63.2 mln t), Tubarao (57.2 mln t), Sepetiba Bay (24.8 mln t), Acu (23.0 mln t), Ponta Ubu (7.1 mln t). In terms of destinations of the shipments, things were quite predictable in 2021. Mainland China was still by far the top destination for Brazilian iron ore, accounting for 67% of Brazil’s exports in 2021. Shipments to Mainland China declined by -3.3% y-o-y to 232.8 mln t in Jan-Dec 2021.

Source: banchero costa &c s.p.a

On the other hand, exports from Brazil to European Union (27) increased by +23.0% y-o-y to 22.7 mln tonnes in Jan-Dec 2021. Shipments to the GCC countries increased by +57.7% y-o-y to 22.0 mln tonnes. To Japan it was a positive rebound by +35.5% y-o-y to 12.1 mln tonnes. And how is it going so far in 2022? In Jan-Apr 2022, shipments from Brazil to China declined by -11.4% yo-y, to 58.7 mln tonnes. Shipments to the EU27 also declined in Jan-Apr 2022 by -3.9% y-o-y to 8.4 mln tonnes. To the GCC it’s -2.7% to 7.4 mln t. Volumes to South Korea declined by -35.3% y-o-y to 1.3 mln tonnes. The only positive note is Japan, posting a +18.1% y-o-y increase to 3.5 mln tonnes in Jan-Apr 2022”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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