Trade data show that Brazil's iron ore exports in the first half of 2019 totaled 162.39 million tons, down 9.8 percent year-on-year, as volumes have not fully recovered from the January incident at the Feijao dam in Minas Gerais.
The share of shipments to China accounted for the largest share of exports, but volumes in the first half of this year fell to 87.09 million tons, decreasing by 16.3% compared to the same period of 2018. Exports to other key steel-producing countries in Asia also declined in the same period to reflect supply constraints, with deliveries to Japan at 7.28 million tons, down 20.7%, and 4.17 million in South Korea tons, up 6.9%.
Exports from Brazil continued to increase in February after the January 25th death in the Brazilian iron ore factory Vale at the Feijiao dam. The accident led to the closure of some of the iron ore mines in the province of Valais, including its second largest mine, Brukutu. Iron ore supplies from Brazil began to decline only in March of this year and continued to decline in June, despite periods of improvement.
But the rate of decline in exports seems to have slowed after falling by 25.9% in March to 2.22 million tons and falling by 26.9% in April. The total volume of iron ore exports to Brazil in May decreased by 13.8% to 29.82 million tons, and in June exports decreased by 16.7% on an annualized basis to 29.4 million tons.
Exports to Europe from Brazil fell in line with the general trend, but the United Kingdom and Poland stand out because they recorded the largest decline for the region in the first half. Deliveries to the UK from January to June amounted to 981,236 tons, which is 53.6% less than year-on-year, which is probably a reflection of the sharp decline in demand for spot this year. The volume of deliveries to Poland for the same period amounted to 202 329 tons, a decrease of 76.8%, which is also a sign of the country's problematic steel industry. The Netherlands remains the largest recipient of Brazilian iron ore in Europe: 6.86 million tons were shipped in the first half of this year, which is 28.7% less than last year. It is followed by Turkey from 2.96 million tons, which is 28.7% less than a year earlier, and France from 2.83 million tons, which is 15.9% less than in a year.
Vale’s supply problems and tighter margins in Europe opened doors for alternative suppliers. The state-controlled Indian producer of iron ore pellets, KIOCL has signed initial agreements with international trading companies Glencore and Steel Mont for sale to the European market, including the UK.
