IRON ORE

General information

Iron ore is
the main dry bulk cargo as it concentrates the largest trading volume per year
and then follows the coal and the grains. In the chart low you can see that for
the year 2016 iron ore trade constitutes 29% of global dry bulk trade.

 
Graph
1  

All these
cargoes have two common features: they are unpacked and homogeneous. Iron ore
is sold to steel companies after it is processed by various industrial
techniques. Generally contrary to the aforementioned commodities (grain, coal),
iron ore has not special sub-categories and it can only be divided by its size
and quality.

Iron ore trade

It is well
known that iron ore market shows a high degree of concentration as far as
imports and exports are concerned since these are controlled respectively by a
small group of countries. It is characteristic that 90% of the world iron ore
is traded between 4 countries.  According
to the graph following the main exporting countries for 2016 were Australia (57.3%)
and Brazil (25.1%). It is really impressive that only these two countries
control more than 80% world iron ore supply. In the third position of exporting
countries we have South Africa and follows Canada, with about 4.3% and 4%
accordingly. As we can perceive iron ore is exported by developing and
developed countries as well.

Graph 2

Here we
have to say that Australia’s iron ore sales rose from 243 million tonnes to 757
million tonnes between 2005-06 and 2015-16 with an annualized growth rate of
12%.(Graph 3) Australia’s sales of iron ore are expected to
rise as mine construction and expansions are completed, but the rate of
increase will be slower than the past ten years. Moreover the Australia Treasury
Pre-election Financial Projections Statement forecasts Western Australia’s iron
ore sales to increase to 830million tonnes by 2019-20.

Graph3

As we will
see later on, China is the main importer of Australian iron ore and this short
distance between the two countries gives an advantage to the sellers due to the
lower freights involved. Maybe that’s why Australian exports have faced such a
growth the last decade.  China accounted
for 82% of Australian iron ore exports in 2016 followed by Japan (9%) ,
Korea(6%) and Taiwan (2%).Over the past ten years these exports to China rose
by 18% whereas to the other three countries seem to follow an almost sticky
pace. (Graph 4)Graph 4

Loading and unloading conditions

Time can be
characterized as a key point regarding loading and discharging iron ore in the
ports with the highest activity. Cargoes of iron ore can be loaded at very high
speed at most ports of their shipment. Here we have to mention that capsizes
can load about 150,000 MT within a day. If we consider that at the port of
Tubarao there is the  possibility of  loading 16,000 MT per hour , we can easily
understand that a large capsize can fully load in less than a day.