World iron ore imports rose 3.6% to a record high in 2024, but the increase was driven almost entirely by China, the world’s largest buyer of the key steel raw material.
Global iron ore imports by sea totaled 1.707 billion metric tons in 2024, up 60 million tons from 1.647 billion in 2023, according to data compiled by commodities analyst Kpler.
However, of the 60 million ton increase, 59.1 million tons were contributed by China, because imports by sea increased 4.9% to 1.274 billion tons.
This means China’s imports of iron ore by sea will reach a record high in 2024, a fact that seems inconsistent with a possible decline in steel production.
Official data shows crude steel production in the first 11 months of 2024 amounted to 929.19 million tons, down 2.7% compared to the same period in 2023.
Considering December may be a slow month for steel production due to winter shutdowns and lower seasonal demand, it is likely that full year production will be lower in 2024 from 2023.
Despite this, China’s steel production will reach a level of around 1 billion tons in 2024, marking the sixth consecutive year that steel production has reached that figure.
With China’s steel production effectively flat since 2019, the question for markets is why iron ore imports are increasing in 2024.
There is likely to be an element of replacement of lower quality domestic production, but the main driving factors are likely to be lower price trends throughout the year and increased inventories.
PRICE TRENDS
The price of iron ore contracts traded on the Singapore Exchange (SZZFc1) reached its 2024 peak at the start of the year, reaching $143.60 per tonne on January 3.
The price then fell to a low of $91.10 per tonne on September 10, before recovering to end the year at $103.61.
But a 28% decline so far this year is likely enough to encourage Chinese steel mills and traders to increase purchases, especially in the second half of the year when prices are lower than in the first half.
Prices had a weak start to 2025, falling to $97.36 a tonne on Wednesday.
The decline was driven more by sentiment, given concerns regarding the trade policies of the US administration under President-elect Donald Trump, with threats of tariffs of up to 60% to be imposed on steel-intensive industries such as manufacturing.
China has also been rebuilding supplies, with port stocks monitored by consultancy SteelHome (SH-TOT-IRONINV) ending last year at 146.85 million tonnes, up from 114.5 million at the end of 2023.
The 32.4 million tonne increase is slightly more than half of the total increase in seaborne imports, underscoring the importance of rising inventories to China’s iron ore demand in 2024.
The outlook for China’s iron ore and steel sectors is clouded by uncertainty over what actual policies the new Trump administration will implement, and how China and other affected countries will respond.
Like other commodity markets, iron ore is largely in wait-and-see mode ahead of Trump’s return to office on January 20.
EUROPE, MIDDLE EAST
The same uncertainty will also weigh on iron ore demand outside China, but there are several trends that are likely to continue.
Demand in developed countries in Europe is likely to continue to weaken, after imports in 2024 fell to 85.12 million tonnes from 88.40 million in 2023, with most of the decline concentrated in the UK.
Japan, the world’s second largest importer, also experienced a decline with arrivals by sea in 2024 amounting to 88.19 million tonnes, down from 98.71 million tonnes in the previous year.
The decline in imports in Europe and Japan was offset by an increase in small buyers, particularly in the Middle East and North Africa.
Overall, even though the composition of demand for iron originating from outside China has shifted, it is likely that the volume will remain stable, considering that Trump’s policies have only had a small impact on global growth.
Source: Reuters
