Strong growth ore throughput Rotterdam

In the first six months of 2008, 13% more ore and scrap were handled in the port of Rotterdam

than in the same period of last year. Expressed in millions of tonnes, throughput increased from 18.8 to 21.4 million tonnes. In comparison with the first quarter (+15%), growth was down slightly. This trend is expected to continue in the second half of the year. Prospects for steel production remain positive, but declining economic growth will threaten growth in the short term. In the (medium to) long term, Rotterdam is set to strengthen its position in the global supply chain for ores and steel.

The complete figures for the port of Rotterdam and the financial results for the Port of Rotterdam Authority for the first six months of the year will be presented on 19 August.

Half year

Incoming trade in ore was disrupted up to the end of June due to capacity problems in the loading ports, so that stocks in Rotterdam became low. This was accompanied by continuing high demand for steel, despite the declining economic growth in the EU and United States.

Steel production in the EU has been high up to now, like last year, at 108.4 mln tonnes (108.5 mln tonnes in 1st half of 2007). In addition to this, those manufactures who are important to Rotterdam invested in increasing their production capacity. In January, ThyssenKruppSteel (TKS) put a new blast furnace into operation and in April restarted blast furnace 1 after a major overhaul lasting two months. The TKS blast furnace is in Duisburg, which is supplied by push towing via Rotterdam. In February, ArcelorMittal reopened a blast furnace in Liège. Other important clients for Rotterdam are Voest Alpine in Austria, Dillinger Hüttenwerke in Saarland and Stahlwerke Bremen, which is also owned by ArcelorMittal.

Exports of scrap were high, around 900,000 tonnes against about 700,000 in the first half of last year, thanks to the Turkish steel industry, which is operating at full capacity.

Throughput and transit

Rotterdam is the largest European ore port, with a market share of 40% and Brazil is by far the main source country. Incoming trade is handled at the EECV, which works exclusively for TKS, and the EMO.

Smaller sea-going vessels carry the cargo on to Bremen, but the lion's share is transported by inland shipping and rail. More use is to be made of the Betuwe Route because the higher costs for use are offset, on balance, by the advantages of unhindered passage. Unplanned stops on the mixed network cost a lot of power and money. 

Supply and prices 

For Rotterdam, Brazil is far and away the most important source country for ore. The supplier is Vale (formerly Companhia Vale do Rio Doce - CVRD). Ore prices have shot up since 2005, this year by as much as 70%. Added to this, transport costs have doubled in the past three years, due to restricted ship's capacity, to approximately 15 dollars per tonne. However, this only has a limited effect on supplies (see graph) as long as the costs can be passed on. In addition to this, the low dollar is favourable for European importers. The high demand for steel is therefore the decisive factor. A price effect could be felt around the time of the annual setting of ore prices in April, and the higher capital costs of stocks also play a role. These costs weigh less heavily, however, if supplies of ore are tight and irregular. The three largest ore producers, Vale (83 million tonnes), Rio Tinto (37) and BHP Billiton (28) with a 75% share in overseas trade, will be increasing production by 5-10% per annum in the coming years. The continuing high demand for steel is expected to force ore prices up, however, by an annual 10-20%. In addition to this, transport capacity remains a problem for the time being. It takes time to expand loading ports and increase ship's capacity.

Rotterdam and global integration

Suppliers and producers are responding to the highly dynamic market via forward and backward

integration respectively. The Port of Rotterdam Authority plays a facilitating role in these global

strategic processes. The large steel producers are going to the source by operating mines themselves, such as ArcelorMittal in e.g. India, considering participation in mining companies or producing raw steel closer to the mines. TKS, for example, will be casting so-called slabs (steel sheets) in Brazil from 2009 onwards. These will be transported to Germany via the Steinweg terminal on the Maasvlakte, which is currently under construction. Vale is integrating forwards by commissioning the construction of a substantial number of super ore vessels and through the construction of a plant for ore pellets in the port of Sohar, where the Port of Rotterdam Authority is co-investing in the infrastructure. Finally, in Rotterdam, the handling capacity for finished steel is being further expanded.