Japan’s iron ore market
Japan accounts for 10%–13% of the seaborne market. So, Japan’s iron ore imports are another good indicator of demand.
Japan’s Ministry of Economy, Trade and Industry releases data for Japanese iron ore imports on a monthly basis. Japan’s iron ore imports totaled 11.6 million tons in March. This is 6.8% higher compared to February’s 10.9 million tons and 7% higher YoY (year-over-year).
Australia was the largest exporter to Japan during March. Its imports from Australia totaled 6.7 million tons—forming 58% of its total iron ore imports.
For full-year 2014, Japan imported 136.44 million tons of iron ore. This was a 0.5% increase from 2013. For 1Q15, Japan imported 33.49 million tons. The imports were down 1.3%—compared to the same period last year. So, overall Japanese demand for iron ore has been subdued.
Weak demand from major iron ore consumers is putting more pressure on iron ore prices. It also negatively impacts iron ore companies in seaborne trade including Rio Tinto (RIO), BHP Billiton (BHP) (BLT), Vale (VALE), and Cliffs Natural Resources (CLF).
Lower demand also affects funds like the iShares MSCI Global Metals & Mining Producers ETF (PICK). Together, BHP Billiton and Rio Tinto account for 30.7% of PICK. The SPDR S&P Metals & Mining ETF (XME) also invests in metals and mining companies.
China consumes close to two-thirds of the overall seaborne iron ore. As a result, its import appetite is vital to know the demand side of the story. In the next part of this series, we’ll see how China’s imports are progressing.