Iron Ore Market 2026: Supply Surge Meets Weakening Demand as Prices Face Downward Pressure

The iron ore price outlook for 2026 presents a mixed picture. While prices rebounded following their September 2024 lows, momentum is expected to weaken significantly in the coming year as surging mine capacity collides with softer global demand. According to market analysis, the iron ore price is projected to decline below the US$100 per metric ton (MT) threshold, with consensus estimates ranging from US$94 to US$98 per MT for the full year.

The Iron Ore Price Journey Through 2025

The base metal had a volatile year. Trading opened at US$99.44 per MT in early January, climbing to US$107.26 by mid-February before retreating as spring arrived. The market experienced a significant correction in April when geopolitical tariff fears triggered a broader commodities rout, pushing prices toward US$99 before a brief recovery. The worst was yet to come—by July 1, iron ore prices had slumped to a yearly low of US$93.41, reflecting persistent weakness in Chinese property markets and global manufacturing concerns.

Recovery arrived in Q3. Prices rebounded above US$100 by August and touched US$106.08 in September. The final quarter remained rangebound, with prices fluctuating between US$104 and US$107.88 before settling around US$106.13 by year-end.

Understanding the Demand Headwinds

The primary weight on iron ore prices stems from China’s ongoing property sector collapse. Since major developers filed for bankruptcy in 2021 after accumulating massive debt, government stimulus has failed to stabilize the market. This matters enormously because construction accounts for roughly 50% of global steel consumption, and China dominates worldwide steel production despite lacking sufficient domestic iron ore supplies.

Adding complexity, China’s policy shift toward manufacturing and technology—away from fixed-asset investment—is dampening long-term steel demand. While export-driven steel production to Southeast Asia, the Middle East, and Africa has partially offset domestic weakness, this effect may have limited staying power.

The Electric Arc Furnace Transition

A structural trend reshaping iron ore demand is the shift toward electric arc furnaces (EAF), accelerated by climate policies. China’s EAF capacity currently represents 12% of steel production and is projected to reach 18% by the early 2030s as the nation pursues emission caps. The EU’s Carbon Border Adjustment Mechanism, effective January 1, 2026, is also pushing steelmakers toward lower-carbon production methods.

The critical issue: EAF facilities use scrap steel, not raw iron ore. Countries expanding steel output—India, Russia, Brazil—are self-sufficient in iron ore and don’t import. This structural shift creates a fundamental headwind for iron ore prices regardless of overall steel demand.

Supply Shock from Simandou

The game-changing development is Guinea’s Simandou mine, which began shipping in December 2024. With 65% iron content—among the world’s highest grades—Simandou is ramping toward 15-20 million MT annually by 2026 and 40-50 million MT by 2027. Ownership is split between Rio Tinto/Chinalco/Guinea and a Chinese-Singaporean consortium controlling blocks one and two.

This supply influx carries strategic implications. For 15 years, China has attempted to diversify beyond Australian producers. Simandou finally provides that opportunity, fundamentally reshaping regional supply chains. The new production will be a determining factor in iron ore price movements throughout 2026.

Tariff Impacts: Limited But Uncertain

US tariffs pose minimal direct risk to iron ore markets. While American steel demand exceeds domestic capacity, Chinese imports remain negligible in that sector. Canada and Brazil face steel tariffs (25% and 50% respectively), but both have exemptions for iron ore pellets—though CUSMA renegotiations in 2026 introduce uncertainty.

Europe’s CBAM presents more systemic pressure, potentially incentivizing producers to shift manufacturing methods and source materials strategically—another factor favoring China’s access to new supply sources.

The 2026 Outlook: Prices Under Siege

Consensus forecasts suggest iron ore prices will struggle in 2026. The first half may benefit from seasonal demand patterns, potentially holding between US$100-105 per MT, but H2 is expected to see a breakdown toward the US$90s as Simandou ramps accelerate supply precisely when demand remains lackluster.

The iron ore price trajectory hinges on three variables: continued weakness in Chinese construction demand, the pace of EAF adoption globally, and how aggressively Simandou ramps production. With supply-side momentum growing while demand-side tailwinds fade, downside risk appears asymmetric.