All available indicators at the start of 2025 show that iron ore prices will likely remain subdued in the new year. According to the latest data, the supply side will remain strong. However, steel demand does not look very good – at least for now. BMI, a research agency under Fitch Solutions, was quoted in Hindu BusinessLine as saying that iron ore prices are likely to decline as weakened Chinese demand and the possibility of stricter trade protectionist measures limit market demand.
Another report by Reuters cited data from the consultancy firm Steelhome, which projected that iron ore prices would drop to US $75–$120 per ton in 2025, compared to the US $88–$144 per ton seen in 2024. Meanwhile, other analysts, such as UBS’ head of mining, Myles Allsop, said they expected a moderate surplus in 2025, with prices stabilizing around US $95–$100 per ton.
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Futures Down as Iron Ore Prices Hit Obstacles
Even the futures market seems to be endorsing this bearish outlook for iron ore. Iron ore futures continued to decline in the first week of January, reaching their lowest level in over a month on Monday. This mainly stemmed from a slowdown in hot metal output in China and weakness in the country’s equity markets, which put additional pressure on prices.
On China’s Dalian Commodity Exchange, the heavily traded May iron ore contract reportedly ended daytime trading 2.21% lower, at approximately US $102 (751.5 yuan) per metric ton. This marked its weakest level since November 19, 2024. Meanwhile, benchmark February iron ore on the Singapore Exchange reportedly eased over 1.50%.
The ongoing trade tensions with the US, the yuan’s value and the performance of China’s stock market are among the many things analysts have attributed to this downturn. Along with iron ore, prices of coking coal and coke have also declined. For the most part, steel futures also mostly dropped, save for for a modest increase in stainless steel.
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Supplies into China Decline Further
Some are hopeful that the Chinese New Year, which is still a few weeks away, could add some short-term support to iron ore prices. However, analysts from Citi Group had a slightly different take. A report analyzing the performance of Vale S.A. in the new year noted that iron ore supply to China from countries outside Brazil and Australia experienced a significant drop, decreasing by about 130 million tons on an annualized basis between the first and fourth quarters of 2024.
This decline could potentially drive an unexpected rise in iron ore prices in 2025. However, the firm added that investor sentiment may remain subdued due to the expected boost in supply from the Simandou mine. The latter will begin iron ore production later in 2025, bringing new stock to the iron ore market.
All Eyes On China
ING Think, the economic and financial analysis arm of Dutch multinational ING, also predicted that iron ore prices will face continued pressure in 2025 due to weak steel demand, robust iron ore shipments and high port inventories.
China’s economic outlook and related factors could either boost prices or bring them down even further than predicted levels. The country remains the world’s largest iron ore consumer, and, for now, data emerging from that country does not bear well for the future of iron ore in 2025.
Still, the country’s China Metallurgical Industry Planning and Research Institute predicts that 2025 steel demand will decrease by about 1.5% in the wake of an expected 4.4% year-on-year decline in 2024. Moreover, China continues to import iron ore, and does not show any signs of slowing down on this front.
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Prices Must Also Contend with Stockpiling, Increased Production
A Reuters survey of traders and analysts showed that China’s iron ore imports expect to reach a new high in 2025 as traders stockpile low-cost ore for the world’s largest consumer. This prediction comes despite a prolonged property crisis that continues to suppress Chinese steel demand.
According to the survey, exports of the key steelmaking material could increase by 10 to 40 MMT, reaching up to 1.27 billion tons in 2025. If true, this would surpass the record volumes anticipated for 2024. Experts primarily attribute this growth to increased supply from major producers like Australia and Brazil, as miners seek to offload ore before the massive Simandou iron ore project begins production.
