BMI expects lower iron ore prices next year
Release Date:
2025-11-28
BMI Country Risk and Industry Research is forecasting that iron ore prices will average $95/tonne in 2026, slightly lower than the $97/t expected in 2025.
The downward pressure is being driven by additional supply from the Simandou project in Guinea and persistent weak domestic demand in Mainland China, Kallanish notes from its research note.
Over the long term, BMI also expects iron ore prices to follow a multi-year downtrend, predicting prices will decline to $78/t by 2034.
Despite low near-term inventories in China, which are currently supporting prices, it expects significant headwinds over the coming months. Weakness in China’s construction sector is expected to continue disappointing market participants, amid the absence of meaningful stimulus to the country's heavy industries.
Meanwhile, environmental regulations and weak domestic demand are set to pressure steel production, reducing the need to purchase raw iron ore.
"That said, we do not see any collapse as easing trade tensions, which should continue to support Chinese steel exports, and a still resilient global economy hold the floor under prices," it adds.
On the supply side, BMI says that iron ore production remains healthy across major miners, with shipments and output broadly maintained despite early-year weather challenges.
Over the long term, it maintains its view that iron ore prices will consistently trend downwards as cooling steel production growth and higher global iron ore output weigh on the market.
The main driver will be China’s slowing demand growth, a trend already in its early stages. The economy is undergoing a structural shift away from industrial, steel-intensive sectors towards services and less metal focused infrastructure.
BMI also expects an increased global focus on lower carbon steel. This type of steel requires much less iron ore and is produced using electric arc furnaces, moving away from the highly polluting, iron ore-intensive blast furnace production model.
From: Kallanish
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