2026 Iron Ore Price Outlook: Key Supply and Demand Factors Reshaping the Market

Multiple forces are converging to shape iron ore price movements in 2026. After a mixed performance in 2025, the iron ore market faces a critical juncture: weakening demand from China’s struggling construction sector collides with surging supply from new mining operations, while evolving trade policies and industrial transitions add layers of complexity.

The 2025 Performance: Volatility Amid Structural Headwinds

The past year revealed the fragility of iron ore price stability. Starting at US$99.44 per metric ton in early January, prices climbed to US$107.26 by mid-February before entering a turbulent period. A sharp sell-off in March dragged the market toward US$100, followed by brief recoveries that ultimately couldn’t hold. By May, prices had slipped to US$97.41, culminating in a yearly trough of US$93.41 in July.

The second half showed resilience. Third-quarter momentum pushed prices above US$100 again, peaking at US$106.08 in September. The final months remained range-bound, with prices fluctuating between US$104 and US$107.88 before settling near US$106 as the year closed.

This volatility reflected two dominant pressures. First, China’s property crisis—triggered by the 2021 collapse of major developers like Country Garden and Evergrande—continues to erode steel demand, dragging down iron ore consumption. Second, US tariff threats in April, particularly the 10% broad-based levies announced under “Liberation Day,” sparked fears of global recession and triggered commodity sell-offs, though subsequent market rebounds limited the damage.

China’s Declining Steel Demand: The Primary Headwind

Looking ahead to 2026, China remains the critical variable. Despite an expected GDP growth rate of 4.8%, the property sector is forecast to contract further throughout the year. This dynamic creates an asymmetrical demand problem: construction represents roughly 50% of China’s steel end-use consumption, and its sustained weakness directly suppresses iron ore demand.

However, the story isn’t entirely one of decline. Chinese steelmakers have increasingly pivoted toward export markets—Southeast Asia, East Asia, the Middle East, Latin America, and Africa have absorbed significant volumes. Whether these exports can expand further is uncertain, but current flows suggest the domestic demand collapse hasn’t fully translated into lower global steel production.

The Supply Shock: Simandou and the New Competitive Landscape

The most significant market-mover for iron ore in 2026 will be production ramp-up from Guinea’s massive Simandou mine complex. After its first shipment in December 2025, the operation is positioned to produce 15-20 million metric tons in 2026, scaling to 40-50 million MT by 2027. With an iron content of 65%—higher than many competitors—Simandou represents a material increase in global supply.

Ownership structure matters strategically: Chinese interests control significant stakes through Chinalco and China Hongqiao Group, enabling Chinese steelmakers to diversify away from traditional Australian suppliers—a shift the country has pursued unsuccessfully for over a decade. This supply-demand inversion, combined with softening demand growth, creates downward pressure on iron ore prices throughout 2026.

Structural Shifts: The Electric Arc Furnace Transition

Industrial decarbonization is reshaping iron ore demand at a fundamental level. China’s push toward a 2030 emissions cap is accelerating adoption of electric arc furnaces, which currently account for 12% of steel production and are expected to reach 18% by the early 2030s. The critical detail: electric arc furnaces rely primarily on scrap steel rather than raw iron ore.

Europe’s Carbon Border Adjustment Mechanism, now in effect as of January 1, 2026, reinforces this trend. High-carbon steel imports face levies, incentivizing a shift toward lower-carbon electric arc production. Steelmakers expanding capacity—primarily India, with secondary contributions from Russia, Brazil, and Iran—are largely self-sufficient in iron ore, meaning their growth doesn’t support demand for imports.

Tariff Dynamics: Limited But Uncertain Impact

US steel tariffs (25% from Canada, 50% from Brazil) carry conditional exemptions for iron ore pellets and Canadian ferrous scrap under CUSMA provisions. However, 2026 renegotiations of the trade agreement introduce uncertainty. If blanket exemptions are removed, additional tariff pressure could cascade through supply chains. For now, the tariff impact on iron ore remains muted, but downside risks persist.

The 2026 Price Forecast: Downside Bias

Market consensus points to renewed pressure on iron ore prices in 2026. Forecasts cluster around US$94-US$98 per metric ton, with analysts expecting a gradual decline across the year. The base case envisions prices remaining in the US$100-US$105 range through the first half, supported by seasonal demand patterns, before retreating below US$100 in the second half as Simandou supply ramps and demand weakens.

This downside bias reflects a fundamental mismatch: supply growth from new and expanding mines collides with structural demand headwinds from China’s property slump, industrial decarbonization favoring scrap inputs, and tariff-induced shifts toward lower-carbon production methods. Unless Chinese stimulus meaningfully revitalizes construction or global trade tensions ease unexpectedly, iron ore price recovery appears unlikely in the near term.