Ukraine regained some of its mojo since war broke out with Russia almost two years ago, at least as iron ore is concerned. In fact, it is possible this will have significant repercussions for iron ore prices.
According to media reports quoting official data from the State Customs Service, Ukraine has exported almost 28 million tons (MT) of iron ore between January and October 2024. This represents as much as a 96% increase over the corresponding period in 2023.
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A Major Recovery Given the Ongoing War
October was no different from earlier months where iron ore exports were concerned. According to GMK Center, mining companies in Ukraine increased exports by over 31% compared to September to 2.54 MT. When compared to October 2023, the figure was up by 65.2%.
Before the war, Ukraine’s traditional client was China. While the latter still remains the number one buyer of Ukrainian ore, Ukraine now has an increased number of buyers in the European Union, including countries like Poland and Slovakia.
The conflict and disruption of essential logistics routes through southern Black Sea ports have greatly impacted Ukrainian producers’ output, export volumes and market reach. However, during these challenging times, Eastern and Central European countries have emerged as key strategic partners for Ukraine’s mining and metallurgical industries, absorbing a substantial portion of Ukrainian exports.
Based on data from Ukraine’s State Customs Service, Ukraine’s total iron ore exports dropped to 17.75 MT in 2023, a 26% decrease from the 22.37 MT seen in 2022. This figure also reflects a 60% decline from 28.4 MT in 2021, the year before Russia invaded Ukraine.
Turkey Emerges as a Critical New Partner
Turkey recently emerged as a critical heavy buyer of Ukrainian steel. From January to July this year, Turkish steel producers imported almost 930 thousand tons of iron ore from Ukraine. According to preliminary data from the Turkish Statistical Institute (TUIK) as reported by SteelOrbis, this represents a 178.8% increase compared to the 333.44 thousand tons seen over the same period in 2023
In July alone, Turkey imported 77.03 thousand tons of Ukrainian iron ore, marking a 51.4% decrease from the previous month. In July 2023, this volume was just 3.2 thousand tons. Overall, Turkey’s iron ore imports over the seven-month period rose by 58% year-over-year to 6.68 MT, with expenditures up 61.9% to $869.34 million.
In July, Turkey imported 1.26 MT, a 34.5% increase from June and a 98.8% rise year-over-year. Monthly import costs reached $148.81 million, a 27.2% increase from June and a 101.5% jump from July 2023.
Potential Effects on Iron Ore Prices
Iron ore prices have come down almost a quarter from 2023 levels. Several days ago, iron ore edged closer to $100 per ton as Beijing’s recent economic stimulus measures fell short of investor expectations. At the same time, rising stockpiles at Chinese ports underscored abundant supply.
Last Monday, iron ore futures fell by up to 2% in Singapore after dropping on the previous Friday. The move followed the Chinese government’s announcement of a debt-swap plan that lacked measures to directly stimulate domestic demand, particularly in the struggling property sector.
China Remains a Major Factor
The steelmaking commodity has been heavily affected by China’s property downturn and increased production by miners. With mills in the largest steel-producing country in the world facing weak domestic demand, steel exports surged last month to their highest level since 2015.
Just a month or so ago, iron ore saw a significant price surge after three major Chinese cities eased restrictions on home-buying. This move aimed to boost demand and support the struggling property market, offering relief to steelmakers grappling with an oversupply of steel.
Iron ore stockpiles at Chinese ports have also grown over the past four weeks, reaching their highest level since early September. Seasonally, these inventories are at a record high for this time of year. Ultimately, it remains one of the weakest-performing commodities.
By Sohrab Darabshaw
