Dry Bulk Market: Japan’s Iron Ore Demand Keeps Retreating

Iron ore demand from Japan have been steadily falling over the past few years, even before the pandemic and so far, 2023, is proving to be no exception. In its latest weekly report, shipbroker Banchero Costa said that “2023 has been so far a positive year for global iron ore trade. In Jan-Jun 2023, global loadings of iron ore increased by +3.9% y-o-y to 761.0 mln tonnes, from 732.5 in the same period of 2022. It is also just above the 755.1 mln tonnes loaded in Jan-Jun 2021, which was the last all-time record. Exports from Australia increased by +2.8% y-o-y in Jan-Jun 2023 to 448.1 mln tonnes, easily a new all-time record high. Exports from Brazil also increased by +7.3% y-o-y in Jan-Jun 2023 to 164.7 mln t from 153.6 mln t in Jan-Jun 2022, and also just above the 163.8 mln t in Jan-Jun 2021. From South Africa volumes have been down -4.6% y-o-y to 27.7 mln t. From Canada, export volumes were up +5.5% y-o-y to 24.5 mln t in JanJun 2023. India also saw an increase of +39.3% y-o-y to 17.8 mln tonnes”.

According to the shipbroker, “demand has been poor everywhere except in Mainland China. Chinese imports of iron ore surged by +9.2% y-o-y to 562.2 mln tonnes in Jan-Jun 2023, a record high. To the European Union imports ended up down -18.1% y-o-y to 34.8 mln tonnes in Jan-Jun 2023. Iron ore imports into Japan declined by -11.6% y-o-y in Jan-Jun 2023 to 42.4 mln t. Volumes into South Korea were down by -12.5% y-o-y to 32.8 mln t. Japan is the second largest importer of iron ore in the world, after Mainland China, and ahead of the EU and South Korea”.

Banchero Costa noted that “in Jan-Dec 2022, Japan accounted for 6.0% of global seaborne iron ore shipments. Iron ore imports into Japan have been steadily declining over the years, even before Covid-19. Japan’s iron ore imports in the 12 months of 2020 declined by -13.3% y-o-y to 86.3 mln t, from 99.5 mln t in 2019. That was itself down -9.1% from 109.5 mln t in 2018. In 2021, volumes into Japan rebounded quite strongly, increasing by +13.7% y-o-y to 98.1 mln tonnes. This however was still below the 99.5 mln tonnes Japan imported in 2019, and well below the 109.5 mln tonnes imported in 2018. When it comes to 2022, the first half of the year was still fairly flat, but the second half went sour again. In January-June 2022, Japan imported 48.0 mln tonnes of iron ore, down -1.2% y-o-y from 48.5 mln tonnes in the same period of 2021. However, the second half of 2022 recorded only 42.6 mln tonnes, which was a -14.1% y-o-y decline”.

Meanwhile, “in the first half of 2023, this downward trend continued. In JanJun 2023, Japan imported just 42.4 mln tonnes of iron ore, down -11.6% y-o-y from the same period last year. It’s interesting to note that as much as 91% of Japanese iron ore imports are carried on Capesize tonnage. 8% is caried on Post-Panamax tonnage, and 1% on Supramaxes. In terms of sources of iron ore imports into Japan, things are quite predictable. Australia remains by far the largest exporter to Japan, accounting for 67.3% of Japan’s imports this year. Volumes from Australia to Japan declined in the first half of this year by -12.4% y-o-y to 28.6 mln tonnes.

The second largest source for Japan’s iron ore imports is Brazil, accounting for a 11.4% share. Shipments from Brazil to Japan also declined this year, by -13.9% y-o-y to 4.8 mln tonnes in the first 6 months of 2023, from 5.6 mln tonnes in the same period of 2022. The third largest supplier is Canada with a 7.1% share. Volumes from Canada to Japan declined by -11.8% y-o-y to 3.0 mln tonnes in 1H 2023. Shipments from the Philippines increased by +7.6% y-o-y to 2.9 mln tonnes. Volumes from South Africa to Japan declined by -4.9% y-o-y to 1.7 mln tonnes in 1H 2023”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide