Global iron ore shipments recorded a 5% year-on-year increase during the first 12 weeks of 2026, supported by stronger import demand from China, according to BIMCO. However, this growth comes against a contrasting backdrop, as China’s steel production declined by 4% year-on-year during the first two months of the year, leading to a surge in portside inventories.
Iron ore stockpiles at Chinese ports reached a record high of 179.5 million tonnes on 12 March, reflecting the imbalance between rising imports and weaker steel output. Filipe Gouveia noted that the mismatch between supply and production has contributed to the inventory build-up.
China’s steel sector has been under sustained pressure since 2023, primarily due to a prolonged downturn in its property market. Reduced real estate construction activity has dampened domestic steel demand, while increased exports have only partially offset the decline. China continues to dominate global iron ore trade, accounting for 74% of total shipments, with the raw material mainly used in blast furnace-based steel production.
Despite the slowdown in steel output, iron ore imports remain competitive compared to domestic supplies. Higher-quality imported ore enables Chinese steel mills to improve efficiency and reduce coke consumption. Although increased imports led to a 3% year-on-year drop in domestic mining in 2025, production rebounded by 2% year-on-year in the first two months of 2026, further adding to supply pressures.
The rise in iron ore shipments has also supported dry bulk freight markets, particularly the capesize segment, which transports around 90% of global iron ore volumes. Limited fleet growth combined with strong cargo demand—including bauxite—has bolstered freight rates. Iron ore alone accounts for approximately 73% of capesize tonne-mile demand.
On the supply side, Australia has emerged as the biggest beneficiary of increased Chinese demand, with exports rising 10% year-on-year so far in 2026. In contrast, Brazil recorded a modest 2% increase, as heavy rainfall disrupted mining operations. Among smaller exporters, Peru, Liberia, and Guinea saw notable export growth, while Ukraine experienced a sharp 66% year-on-year decline in shipments.
Meanwhile, geopolitical tensions linked to the Iran war are having a limited direct impact on iron ore trade. Shipments through the Strait of Hormuz account for only about 2% of tonne-mile demand, with Oman contributing an additional 2%. However, indirect effects are emerging, particularly through reduced diesel availability, which could disrupt mining operations in key producing nations such as Australia and South Africa.
Higher global energy prices resulting from the conflict may also weigh further on China’s domestic steel demand, adding another layer of uncertainty to the iron ore market outlook.
