According to data from SunSirs' iron ore price index, the steel industry in 2025 exhibited a distinct pattern of "high in the first half, low in the second half, and phased differentiation." In the first quarter, infrastructure investment provided support, stabilizing the market. In the second and third quarters, although the industry was temporarily impacted by external tariff wars, as Sino-US trade friction entered a controlled phase, coupled with domestic "anti-overcapacity" and unified market policies taking effect, market sentiment improved, and steel prices rebounded significantly. Falling coal prices and better-than-expected export growth jointly supported the stable operation of the industry, and leading companies saw a significant recovery in profitability. However, in the fourth quarter, due to the deep adjustment in the real estate sector, weak end-user demand led to inventory accumulation, putting renewed pressure on industry profits, and major product categories fell into losses. Looking ahead, the industry needs to continuously promote structural optimization and green transformation while controlling risks to adapt to the new normal of changing demand structures.
Outlook for the iron ore market in 2026:
On the supply side, the decrease in total iron ore shipments in 2025 was mainly due to the impact of the international environment and weather on mining companies. However, as the international situation gradually stabilizes, the shipment volume of mining companies will begin to stabilize. The supply side is expected to show a pattern of "overall ample supply and optimized structure." Production from mainstream mines will remain stable with a slight increase, and new projects such as Simandou will be key variables in the second half of the year. Non-mainstream mine supply is sensitive to price and will remain active at certain price levels. Domestic mines, supported by policies, will maintain stable production but with limited growth. Overall, global iron ore supply growth is expected to once again exceed demand growth, putting continuous downward pressure on prices.
On the demand side, based on the steel mill profit situation in 2025, it is highly probable that domestic steel mills will continue to reduce production and control consumption in 2026, particularly controlling crude steel output. Given the low profit margins for steel mills in the latter half of 2025, voluntary production cuts or reductions are likely to be the norm in 2026. The demand side will exhibit a structural shift characterized by "China peaking and overseas demand taking over." While China's total demand will remain stable or slightly decrease due to production controls, the preference for high-grade ore will strengthen due to environmental requirements, supporting price differentials between different grades. Capacity expansion in India and Southeast Asia will become a new source of demand growth, but this increase is not yet sufficient to fully offset the reduction in China. Therefore, Chinese demand will determine the price floor, while overseas demand will drive the upward potential.
From a macroeconomic perspective, the situation presents a complex picture of both bullish and bearish factors. Expectations of a global economic slowdown will likely suppress overall commodity valuations, while the monetary policy paths of major economies will influence financial pricing through fluctuations in the US dollar. Domestially, the intensity of "dual control" policies on production capacity and output, along with environmental protection policies, are key internal factors, continuously benefiting high-grade iron ore. Geopolitical and trade relations may trigger temporary supply disruptions. In the long term, green transformation technologies such as hydrogen-based metallurgy will gradually reshape the demand landscape for high-quality iron ore.
Regarding scrap steel, prices in 2025 experienced an initial decline, followed by a rise, and then another decline, resulting in overall weak and volatile fluctuation. Steel mills were experiencing low profit margins, leading to low production enthusiasm. However, a strong recovery is expected after operations resume in 2026. While iron ore prices remain relatively stable, blast furnace production costs are high. Coupled with the recent decline in scrap steel prices, steel mills are more inclined to utilize electric arc furnaces for production, which is favorable for scrap steel demand. However, due to the seasonal demand slowdown in January 2026 and the approaching Chinese New Year, steel mills will increase their annual maintenance. If downstream steel inventory accumulation during the winter season falls short of expectations, the demand for scrap steel in January is unlikely to be optimistic.
In summary, based on a comprehensive assessment of supply and demand, inventory levels, and macroeconomic factors, the iron ore market in 2026 is expected to be characterized by a "strong supply and weak demand" pattern, with downward pressure on prices. This will usher in a "new equilibrium" era defined by "peaking Chinese demand and continued overseas demand." Price fluctuations will more frequently revolve around the costs of non-mainstream mines and steel mill profits. Operationally, it is necessary to closely monitor Chinese industrial policies, understand the purchasing rhythm of steel mills, and be vigilant against sudden disruptions in global supply.
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