Iron Ore Price in 2026: What's Really Driving the Market?

The iron ore price story heading into 2026 looks messy. After a rocky 2025 marked by Chinese property sector weakness and US tariff uncertainty, the market faces a critical inflection point: soaring new supply from Guinea’s Simandou mine meets softening global demand. Analysts expect iron ore price to drift lower, with forecasts clustering around US$94-US$98 per metric ton — well below the psychological US$100 threshold that dominated early 2025 discussions.

How Iron Ore Price Performed Last Year

Let’s rewind through 2025. The year opened strong at US$99.44/MT on January 6, then climbed to US$107.26 by mid-February. But March brought brutal selling pressure, dragging prices back toward US$100. The volatility intensified in April when US tariff threats sparked panic across commodities markets, sending iron ore price plunging to US$99.05.

Summer proved even worse. Iron ore price sank to a yearly low of US$93.41 on July 1 — a 13% drop from February peaks — as investor sentiment deteriorated. However, Q3 showed unexpected resilience. Prices rebounded above the US$100 mark in August and peaked at US$106.08 in early September, suggesting demand wasn’t dead.

By year-end, iron ore price stabilized in a narrow range between US$104-US$107, finishing at US$107.88 on December 4 before retreating slightly to US$106.13. For investors, 2025 was a sideways grind rather than a structural breakdown.

The Real Culprits Behind Iron Ore Price Weakness

Three factors hammered iron ore price in 2025:

China’s Property Implosion: Steel demand hinges on construction activity. Since 2021, China’s property sector has been in freefall after Country Garden and Evergrande collapsed under massive debt. Despite government stimulus, the sector remains depressed. This matters because construction accounts for roughly 50% of China’s steel consumption. A broken property market = broken steel demand = suppressed iron ore price globally.

Tariff Shock: In April, US President Trump’s “Liberation Day” tariffs threatened 10% levies across the board. Markets froze. Iron ore price tanked alongside equities. However, when bond market turbulence forced a policy rethink, prices quickly recovered. Still, the psychological damage lingered throughout the year.

Structural Mine Changes: The Simandou mine in Guinea started shipping iron ore in December. This matters. The mine operates at 65% iron content and will ramp up to 15-20 million MT annually in 2026, then 40-50 million MT in 2027. New supply was already pressuring iron ore price expectations for next year.

What’s Coming for Iron Ore Price in 2026?

Three dynamics will shape the iron ore price trajectory:

Demand Side Headwinds: China’s economy is expected to grow 4.8% in 2026, but the property sector will continue its decline. Chinese steel production is expected to trend lower despite offsets from export markets in Southeast Asia, the Middle East, and Africa. More problematically, a shift toward electric arc furnaces (currently 12% of China’s capacity, rising to 18% by 2030) reduces iron ore demand — arc furnaces use scrap steel, not raw ore.

Supply-Side Surge: Every major iron ore producer is ramping production in 2026. Simandou dominates the story. Its Chinese-Singaporean consortium ownership gives China supply diversification away from Australian producers — a strategic win after 15 years of failed attempts. The mine’s high iron content and massive scale will fundamentally alter global supply chains.

Regulatory Pressure: Europe’s Carbon Border Adjustment Mechanism (CBAM) started January 1, 2026. It levies carbon-intensive imports like steel. Chinese steelmakers are already switching to lower-carbon arc furnaces to dodge CBAM tariffs. Meanwhile, US tariff threats on Canadian and Brazilian steel remain live issues, though both nations have iron ore pellet exemptions. The real wildcard: CUSMA renegotiation in 2026 could strip these exemptions.

The Iron Ore Price Outlook

Consensus forecasts paint a bearish picture. Expect iron ore price to average around US$94-US$98/MT in 2026 — roughly 10% below 2025 levels. The first half could hold above US$100/MT due to seasonal demand patterns, but H2 will likely see prices break below that mark as Simandou ramps production.

The core thesis: soft demand growth meets surging new supply. That’s a recipe for iron ore price compression. Unless China’s property sector stages an unexpected comeback or geopolitical disruptions limit Simandou’s output, the metal faces structural headwinds throughout 2026.

For traders, the opportunity isn’t in direction calls — it’s in understanding that iron ore price has shifted from a cyclical story to a structural one. The era of tight markets and steady prices is over.