Iron Ore Market Outlook 2026: What's Ahead as New Supply Emerges and Demand Softens

The iron price market has shown resilience in recent months, recovering from its September 2024 lows. However, as 2026 approaches, a complex mix of factors—from China’s stuttering property sector to evolving trade policies and massive new supply coming online—is poised to reshape the landscape for this critical commodity.

The 2025 Iron Ore Price Journey: Volatility and Recovery

Last year proved to be a tale of two halves for iron ore. The year kicked off at US$99.44 per metric ton in early January before climbing to US$107.26 by mid-February. The spring brought sharp declines, with prices touching US$99.05 in April as broader base metals weakness rippled through markets. By summer, sentiment had deteriorated further, culminating in a yearly nadir of US$93.41 in July.

The second half told a different story. Q3 saw prices regain traction, breaking above the US$100/MT threshold and peaking at US$106.08 in September. The final quarter remained relatively stable, with prices oscillating in a narrow band before settling near US$106-107/MT as the year closed.

Why Iron Price Stumbled in 2025: The Twin Pressures

Two major headwinds dominated iron ore’s narrative throughout 2025. First was China’s persistent real estate crisis. The sector has been in freefall since 2021 when major developers imploded under crushing debt loads. Despite government intervention attempts, the property market shows no signs of meaningful recovery. This matters enormously: construction consumes roughly half of all steel demand, making China’s property woes a global iron price concern.

The second pressure came from trade policy uncertainty. When the new US administration rolled out broad tariff proposals in April—initially a 10% blanket levy with threats of retaliation—it sparked fears of recession and triggered commodity sell-offs across the board. Though markets recovered as these plans were later moderated, the uncertainty lingered throughout the year.

Late-year developments added another dimension: Guinea’s Simandou mine—a massive supply project jointly owned by Rio Tinto, Chinalco, and the Guinea government for blocks 3-4, and by Winning International, China Hongqiao Group, and United Mining Supply for blocks 1-2—began shipments in December. This mine represents a game-changer, expected to produce 15-20 million MT annually by 2026 and 40-50 million MT by 2027.

The 2026 Iron Price Equation: Diverging Trends

Looking ahead, the iron price story becomes increasingly nuanced. China’s economy is forecast to expand 4.8% in 2026, yet the property sector is expected to continue deteriorating. According to market analysts, while construction has historically dominated steel consumption, China is gradually rebalancing toward manufacturing, technology, and services.

The demand side appears challenged. Even as global growth continues, Chinese domestic steel demand faces headwinds. However, strong exports to Southeast Asia, the Middle East, Africa, and Latin America have been supporting Chinese steel mills, partially offsetting domestic weakness.

The supply side is transforming. A critical shift is underway toward electric arc furnaces (EAF), which use scrap steel rather than raw iron ore. China currently operates EAF capacity at 12% of total steel production, with plans to increase this to 18% over the next decade as the country pursues emissions caps by 2030. The EU’s Carbon Border Adjustment Mechanism, now in effect as of January 1, 2026, is accelerating this transition in Europe as well. This architectural change is significant: EAF production directly reduces iron ore demand while increasing scrap demand.

Countries experiencing steel production growth—notably India, Russia, Brazil, and Iran—tend to be self-sufficient in raw materials, meaning they don’t drive iron ore import demand. This geographic mismatch compounds the challenge for iron ore.

New Supply Reshapes the Market Dynamics

The real wild card is Simandou. The mine’s blocks 1-2, controlled by a Chinese-Singaporean consortium, gives China a long-sought alternative to Australian suppliers—something Beijing has pursued for over 15 years without success. The ore’s exceptional 65% iron content makes it particularly efficient. As this mine ramps up production, it will fundamentally shift supply dynamics and regional sourcing patterns.

Meanwhile, other major iron ore producers—Rio Tinto, Vale, Fortescue, and others—are also expanding capacity in 2026, further increasing market supply just as demand growth is expected to soften.

The Iron Price Forecast: Headwinds Prevail

Given soft demand growth colliding with rising supply, iron price momentum appears likely to face pressure. Analyst forecasts cluster around the lower end: Project Blue expects prices to dip below US$100/MT in H2 2026 (likely lingering in the US$100-105/MT range in H1 due to seasonal strength). Other major forecasters predict 2026 averages of US$95 (BMI) to US$98 (RBC Capital Markets), with broader consensus at US$94/MT.

The tariff wildcard remains. While US steel tariffs on Canadian and Brazilian imports are set at 25% and 50% respectively, both countries have exemptions for iron ore pellets. Canadian ferrous scrap benefits from CUSMA trade agreement provisions, though renegotiations in 2026 could change this picture. For now, US iron ore tariff impact appears minimal since the US sources little iron ore from tariff-affected countries.

The iron price in 2026 will ultimately hinge on how quickly Simandou ramps production, whether Chinese demand surprises to the upside, and whether the global manufacturing cycle gains momentum. All signs point to a cautiously bearish year for prices, though Q1 seasonality may offer brief respite.