What Will Drive Iron Ore Price Today and Beyond: A 2026 Outlook

Iron ore prices have demonstrated resilience since the September 2024 trough, yet the commodity encountered significant headwinds throughout 2025. The year ahead presents both challenges and uncertainties that will fundamentally shape market dynamics. As the essential feedstock for steel production—a cornerstone of global construction and manufacturing—iron ore’s trajectory remains inextricably linked to broader economic indicators and policy shifts.

The 2025 Performance: A Mixed Story

The past year told a nuanced tale for iron ore. The commodity opened 2025 at US$99.44 per metric ton (MT), reached US$107.26 by mid-February, but encountered a sharp downturn as March arrived. Price momentum oscillated throughout spring, with April seeing prices plunge to US$99.05 amid broader base metals weakness. The summer months proved particularly challenging, with iron ore reaching a yearly low of US$93.41 on July 1. However, recovery materialized in Q3, with prices surging above the US$100 threshold by August and posting a quarterly peak of US$106.08 on September 8. The final quarter remained largely stable in the US$104-107 range, closing the year near US$106.13 after touching US$107.88 on December 4.

Primary Headwinds: Property Weakness and Trade Uncertainty

Two major forces constrained iron ore price today and throughout 2025. First, China’s construction sector—the world’s largest steel consumer—continued its multi-year decline. Since 2021, when major developers like Country Garden and Evergrande entered bankruptcy, the property market has been in structural freefall despite repeated government interventions. Given that construction represents approximately 50 percent of Chinese steel consumption, this weakness directly suppressed iron ore demand from the world’s largest importer.

Second, trade policy uncertainty created significant volatility. When US President Trump announced broad tariff measures in early April 2025, including a 10 percent baseline levy and retaliatory measures, commodity markets initially panicked. However, subsequent policy modulations and yield curve adjustments limited the damage, though uncertainty persisted throughout the year.

The third notable development emerged late in the year when Guinea’s Simandou mine commenced operations, shipping its first iron ore cargo in early December 2025. This massive project—owned by Rio Tinto, Chinalco, and the Guinean government for blocks three and four, with Winning International, China Hongqiao Group, and United Mining Supply holding blocks one and two—will substantially reshape supply dynamics over the coming years.

2026: A Year of Structural Transitions

Looking ahead to 2026, three powerful megatrends will define iron ore market conditions:

Declining but Stabilizing Chinese Demand

While China’s economy is projected to grow 4.8 percent in 2026, the property sector will continue contracting. This creates an apparent paradox: how can overall steel demand stabilize amid persistent construction weakness? The answer lies in export-driven production. Chinese steel exports to Southeast Asia, East Asia, the Middle East, Latin America, and Africa have offset domestic construction losses. However, whether these export volumes can expand further remains questionable.

Additionally, Chinese steelmakers are transitioning toward electric arc furnaces—currently representing 12 percent of national production but expected to reach 18 percent by early 2027. This shift, driven by emissions-capping goals and the incoming European CBAM tariffs, will reduce iron ore intensity since electric arc furnaces prioritize scrap steel over raw ore. This structural shift represents a significant long-term headwind for iron ore demand.

Supply Expansion Outpacing Demand Growth

The Simandou mine will be the year’s supply story. Production will ramp up progressively throughout 2026, with output reaching 15-20 million MT and scaling further to 40-50 million MT in 2027. The mine’s 65 percent iron content makes it exceptionally high-grade, and its Chinese ownership provides supply diversification opportunities that have eluded Beijing for 15 years.

Simultaneously, major iron ore producers worldwide plan production increases. The combination of ramping Simandou volumes and broader industry expansion will likely create supply-demand imbalance, exerting downward pressure on prices.

Trade Policy and Environmental Regulation

Europe’s Carbon Border Adjustment Mechanism (CBAM) commenced January 1, 2026, applying levies to high-carbon imports including steel. This may accelerate the shift toward lower-carbon electric arc furnaces globally, further reducing iron ore demand. Meanwhile, US tariff impacts on Canadian and Brazilian ore remain uncertain given ongoing CUSMA renegotiations, though exemptions for iron ore pellets currently exist in both nations.

Iron Ore Price Forecasts for 2026

Market consensus suggests subdued pricing ahead. Analysts expect iron ore price today to trade between US$100-105 per MT during the first half of 2026, supported by seasonal demand. However, as Simandou production ramps and supply surges, prices are forecast to slip below the US$100 threshold in H2 2026.

External forecasters align on weakness: BMI predicts US$95 average pricing, RBC Capital Markets sees US$98, and consensus estimates hover around US$94 for the full year. These projections reflect a market where incremental supply meets soft demand growth—a combination unlikely to provide upside surprises for buyers or sellers seeking higher iron ore prices today or in the near term.

The path forward for iron ore depends on whether demand destruction from China’s property slowdown and furnace conversion offsets supply additions from new mines and expanded capacity. Currently, the balance appears to favor price pressure.