Additional supply seen softening iron ore prices
Iron ore prices are expected to soften steadily as rising global supply and moderating steel demand weigh on the market, Kallanish notes from Australia’s Resources and Energy Quarterly report.
The benchmark 61% Fe iron ore price is forecast to average about $91/tonne in 2026, before easing further to around $64/t by 2031 in real terms. Over the past few years, prices have swung with shifting market expectations around Chinese policy stimulus. However, the underlying trend since 2021 has been a gradual decline as new supply has come online and China’s demand growth has slowed.
On the demand side, world steel production is projected to reach about 2 billion tonnes by 2031. While China’s steel output is expected to continue trending lower, growth in India, Southeast Asia and the Middle East is likely to partially offset the decline.
On the supply side, Australian iron ore export volumes rose 6% year-on-year in the March quarter. However, after two decades of expansion, output is expected to plateau within the next two years as new projects mainly replace depleting mines. Total Australian production is forecast to reach about 958 million tonnes by 2030-31, supported by ramp-ups from projects such as Fortescue’s Iron Bridge, Mineral Resources’ Onslow and BHP’s South Flank.
China’s declining steel demand and additional supply from Brazil and Africa are expected to reduce Australia’s exports to its largest market. Growing demand in other parts of Asia should however provide partial offset due to geographic proximity.
Lower prices, easing volumes, declining ore grades and a firmer exchange rate are expected to drive Australian iron ore export earnings down from about AUD 117 billion ($81.26 billion) in 2025-26 to AUD 108 billion in 2026-27. These should fall further to around AUD 77 billion by 2030-31, implying an average annual real decline of 7.2%.
From: Kallanish
Contact Us
Fax:
+86-571-88230113
Address:
28F, Building A, Chengxing International Building, Shangcheng District, Hangzhou, China
