In May 2009 our Commodity Countdown looked at just how dependent global seaborne iron ore trade was on China’s strong import performance. It was noted that China’s percentage share of seaborne global iron ore imports had risen significantly between 2004 and 2008, and looked set to be even higher in 2009. However, few could have foreseen just how important Chinese iron ore demand would be for global iron ore trade and indeed overall dry bulk trade in 2009.

Previous Standings…

Between 1992 and 2000, Chinese iron ore imports were relatively low, and only represented a minor proportion of global seaborne dry bulk trade. Their influence on the growth rate of dry bulk trade was small, as visible on the Graph of the Month, which depicts the growth of global seaborne dry bulk trade and of dry bulk trade excluding imports of iron ore to China.

However, from then on China’s importance began to slowly grow. In 2001 Chinese iron ore imports accounted for 20.5% of total seaborne iron ore imports worldwide and 4.4% of global seaborne dry bulk dry trade, shares which had grown to 49.0% and 12.9% respectively by 2007.

Hurdles to Jump…

The onset of the global economic recession caused widespread concern for global dry bulk trade as the plummeting BDI made headlines, and production cuts at steel mills and iron ore mines were reported on a daily basis. China’s ability to keep up the high growth levels in ore imports seen in the previous few years was brought into question, and many feared that both global iron ore and total dry bulk trade would significantly contract in 2009.

Only One Horse Entered…

However, in reality the Chinese government’s fiscal stimulus package was deployed to startling effect. The country’s ore imports rocketed, rewriting the record monthly import volume five times over the course of 2009. Full year seaborne imports rose by a staggering 38.9% y-o-y to stand at 614.6mt. At a time when the world was cutting back on iron ore imports, this had a profound effect on dry bulk trade. In 2009 Chinese iron ore imports alone accounted for 67.9% of global iron ore trade and 20.6% of world dry bulk trade.

…of Course it Won!

This dominance over the dry bulk market provided the much needed aid for shipowners who were facing some of the worst global shipping markets in decades. As shown on the graph, total global dry bulk trade is currently estimated to have contracted by 2.6% y-o-y in 2009. However, if we simply subtract Chinese iron ore imports from the global dry bulk trade number, the decline in trade is much more pronounced, falling by 9.7% y-o-y.

So, China’s insatiable iron ore appetite in 2009 meant the difference of 7.1 percentage points in the decline of seaborne dry bulk trade. China clearly won the race, but in a race where most of the other horses were arguably going backwards, this is perhaps not a surprising result!