2026 Iron Ore Market Outlook: Navigating Supply Shifts and Demand Pressures

As we move into 2026, the iron ore market faces a critical turning point. After rebounding from September 2024 lows, prices have remained volatile through 2025, caught between rising supply pressures and weakening demand fundamentals. With new production capacity coming online and global steel production by country showing divergent trends, market participants should brace for downward price pressure in the second half of 2026.

The Global Steel Production Landscape and Iron Ore Demand

Understanding iron ore’s trajectory requires examining steel production by country. China dominates global steel output but increasingly faces structural headwinds. While other nations are expanding capacity—particularly India, Brazil, and parts of Russia—they remain self-sufficient in iron ore or produce steel through methods that consume less raw ore.

Europe’s steel production has flattened, with a shift toward electric arc furnaces as decarbonization becomes mandatory. The US, despite higher steel demand relative to domestic production, imports minimal Chinese steel, reducing tariff impacts on iron ore markets. This geographic mismatch between demand and traditional supply sources creates significant repercussions for pricing.

2025: A Year of Mixed Signals

Iron ore opened 2025 at US$99.44 per MT, climbing to US$107.26 by mid-February. A sharp reversal in March pushed prices below US$100, followed by April volatility that saw prices swing from US$104.25 to US$99.05 within days. The metal reached its yearly bottom of US$93.41 in early July—a decisive moment reflecting cumulative market concerns.

The second half of 2025 offered some reprieve. August saw prices break above US$100, peaking at US$106.08 in September. Year-end trading remained congested, with the market posting US$107.88 as the yearly high before settling near US$106.

Two primary forces shaped this volatility: China’s prolonged property sector crisis and US trade policy uncertainty. When President Trump announced his April tariff framework, equities and commodities plunged, with iron ore following suit. Recovery came as markets digested that broader tariff rollouts faced headwinds, but uncertainty lingered throughout the year.

Structural Headwinds: The China Property Factor

China’s real estate collapse since 2021 remains the elephant in the room. With major developers like Country Garden and Evergrande in bankruptcy, government stimulus has failed to restore vigor to the sector. Construction accounts for roughly 50 percent of steel consumption, making China’s property weakness a direct iron ore demand killer.

However, China’s steel production has been partially cushioned by robust exports to Southeast Asia, the Middle East, Africa, and Latin America. Export-driven steel demand has offset some domestic weakness. Whether this export support can sustain itself is questionable—many markets are already well-supplied.

2026: Supply-Demand Imbalance Widens

Experts forecast that despite modest 4.8 percent GDP growth, China’s property sector will continue contracting throughout 2026. Steel consumption from construction will remain depressed. Compounding this, China is actively shifting toward electric arc furnaces, which use scrap steel rather than iron ore as their primary input. Currently accounting for 12 percent of Chinese steel production, electric arc furnaces are projected to reach 18 percent within the next decade—a structural drag on raw ore demand.

At the same time, global iron ore supply is expanding. All major producers plan higher output in 2026, but the game-changer is Guinea’s Simandou mine. Shipping its first cargo in December 2025, Simandou will ramp production over 30 months, reaching 15-20 million MT by 2026 and 40-50 million MT by 2027. With 65 percent iron content and Chinese-consortium ownership of key blocks, the mine will reshape regional supply dynamics and provide China alternative sources beyond traditional Australian suppliers.

Tariff Effects and Market-Specific Dynamics

On the tariff front, broader US measures pose minimal near-term risk to iron ore. While US tariffs on Canadian and Brazilian steel are set at 25 and 50 percent respectively, iron ore pellets enjoy exemptions. The uncertainty lies in potential CUSMA renegotiation—blanket exemptions could be removed, though Canadian steel may secure dedicated exemptions.

Europe’s CBAM penalty mechanism, now in effect as of January 1, 2026, creates longer-term pressure on high-carbon imports like steel. Chinese producers responding by switching to electric arc furnaces further reduces raw iron ore demand—a self-reinforcing cycle unfavorable for prices.

2026 Price Expectations

Consensus forecasts point lower. While prices may remain supported in H1 2026 due to seasonal demand, analysts expect the US$100 per MT threshold to break downward in H2 as Simandou production accelerates. Median expectations range from US$94 to US$98, with some projections hovering near US$95. A reasonable range for 2026 appears to be US$100-105 per MT in the first half, declining below US$100 in the second half.

The iron ore market enters 2026 in a structurally weaker position—demand headwinds from China’s property slump and the shift toward scrap-based production methods collide with surging new supply. For those following the sector, price weakness and rising market share concentration among fewer, larger producers will likely dominate the narrative.