Iron ore shipments to China have increased by 7% year-on-year since the end of June, according to BIMCO’s Shipping Analysis Manager, Filipe Gouveia. The growth follows a stable first half of the year but comes at a time when Chinese steel production remains subdued, resulting in a build-up of portside inventories that have now reached an eight-month high in week 45.
Gouveia attributes the recent uptick in Chinese iron ore purchasing to expectations of higher public spending and signs of a manufacturing rebound, as reflected in China’s Caixin PMI. These factors have also contributed to the recovery in iron ore prices, which had weakened between April and July.
However, despite higher imports, Chinese steel production fell 3% year-on-year in the third quarter of 2025 and has likely remained sluggish into the fourth quarter. The ongoing property market crisis continues to dampen construction activity, keeping domestic steel demand under pressure.
“The increase in iron ore shipments has been positively impacting capesize freight rates, driving a 5% y/y increase in the Baltic Capesize Index since the end of June,” said Gouveia. “However, unless China’s steel production picks up, inventories could rise further and eventually cause a slowdown in shipments in the near term.”
China remains the world’s largest iron ore importer, accounting for 74% of global shipments, with Australia (63%) and Brazil (22%) as its main suppliers. Most of these cargoes are transported by capesize vessels, which represent 57% of the segment’s tonne-mile demand.
Looking ahead, the outlook for Chinese steel demand remains muted. The World Steel Association projects a 1% decline in 2026, citing weakening demand from manufacturing and infrastructure, alongside a property sector that has yet to recover.
Although rising steel exports could offer limited support to production, growth is expected to slow amid increasing trade barriers targeting Chinese steel.
“While China’s steel outlook appears weak, iron ore imports may still perform relatively well,” Gouveia added. “Expanding global mining capacity is driving stronger price competition that could favour imports over lower-grade domestic supplies. Furthermore, new exports from Guinea’s Simandou project could add up to 40 million tonnes in 2026, lengthening sailing distances and boosting tonne-mile demand.”
