China’s Ministry of Transport has reported a year-on-year increase in demand for iron ore during the first four months of 2016, as imports grew by 6.1% to 325.4 million tonnes from January to April.
This bucked a trend that saw the Baltic Dry Index, an indicator of rates in the bulk carrier market, fall to a record low for 19 consecutive months in January this year. The Index hit 317 points, which is less than half the average rate of 718 points in 2015, according to a report into global bulk markets by Clarksons Research.
The iron ore trade accounts for around a third of dry bulk trade. Following rapid growth of 15% in 2014, Chinese imports eased and expansion in iron ore trade slowed in 2015.
One of the major factors for this downturn is the fall off in demand for iron ore used in steel production for construction, automotive assembly lines and manufacturing. China’s domestic economic slowdown, compounded by weak export demand for manufactured products in international markets, means less ore is needed.
The current increase in imports could be temporary as the country’s peak construction season gets under way, but provides some small respite for the bulk sector.
Overall, global iron ore trade is estimated to have grown by only 2% in 2015, and continued weak Chinese steel demand has led to the temporary closure of several major iron ore ports in January, according to Clarksons.
The bulk trades have also been heavily impacted by a decline in demand for coal, which accounts for a quarter of dry bulk trade. Volumes declined by an estimated 5% in 2015, and with several countries looking to increase reliance on clean energy sources, a major improvement in volumes seems unlikely.