Currently, the steel market is in the traditional off-season for consumption. The weak downstream consumption expectations, coupled with insufficient enthusiasm among traders for winter storage, will control the upward trend of steel prices. At the same time, steel mills are operating with low profits, the room for recovery in molten iron output is limited, and the growth in iron ore consumption is sluggish.

It is currently winter, with low outdoor temperatures, significantly restricting construction activities in the real estate and infrastructure sectors. Especially in northern regions, frequent cold, rainy, and snowy weather has not only led to a marked decline in the number of new projects started and construction areas but also forced a slowdown in the progress of infrastructure projects, thus pushing the market into the traditional off-season for construction steel consumption.

Market attention is focused on the winter storage process. At present, some steel mills in Northeast and North China have introduced winter storage policies, some of which are quite attractive, and individual steel mills have even launched flexible clauses of "no price increase when the market rises, and price reduction when the market falls". However, according to the research by relevant institutions, traders are relatively pessimistic about the future consumption expectations, and their enthusiasm for winter storage is generally low. This situation will suppress the rebound height of steel prices, which in turn will put pressure on iron ore prices.

As of January 9, the molten iron output of blast furnaces at 247 steel mills reached 2.295 million tons, having rebounded for three consecutive weeks. However, the overall profits of steel mills are currently at a low level, and some varieties such as hot-rolled coils have even fallen into a state of loss. This will restrict the room for recovery in blast furnace molten iron output, and thus the growth momentum of iron ore consumption demand is also limited.

As of January 9, 2026, the total iron ore inventory at 47 ports nationwide reached 170.44 million tons, with the inventory scale at the highest seasonal level for the same period in recent years. From the supply side, the capacity release rhythm of major global mines is stable. BHP Billiton's Western Australia production area set a record for iron ore output in the 2025 fiscal year, reaching 257 million tons, mainly due to the South Slope production area achieving a production breakthrough of 80 million tons in its first year of operation. The miner has set the iron ore production guidance range for the 2026 fiscal year at 251 million to 262 million tons, with the midpoint of the range basically the same as the actual output in the 2025 fiscal year.

Thanks to the efficient collaboration across mining, processing, rail, and shipping sectors, FMG's total iron ore shipments in the 2025 fiscal year reached 198 million tons, which is at the upper end of the annual guidance range. For the 2026 fiscal year, the miner's shipment guidance range is 195 million to 205 million tons, with the midpoint of the range being 2 million tons higher than the actual shipment volume in the 2025 fiscal year.

The expansion project of Vale's S11D project is progressing steadily. The project plans to add 20 million tons of production capacity. As of the third quarter of 2025, the construction progress of the project has completed 80%, and it is expected to achieve full-load production in the second half of 2026. Vale has set its iron ore production target for 2026 at 335 million to 345 million tons, which is expected to increase by about 5 million tons compared with the actual production in 2025.

The Rio Tinto West Slope Iron Ore Project was planned to make up for the gap caused by the depletion of ore resources in the Pilbara region. Jointly developed by Rio Tinto and China Baowu Group in September 2022, the project has a designed annual production capacity of 25 million tons. It was fully completed and put into operation in June 2025, and its output in 2026 will achieve a year-on-year growth compared with that in 2025.

It is worth noting that the Simandou iron ore mine in Guinea is the world's largest undeveloped high-grade iron ore resource. The project shipped its first batch of 200,000 tons of iron ore in December 2025, and plans to increase its production capacity to 120 million tons per year within 30 months after the trial operation, with a production target of 5 million to 10 million tons for 2026. With the additional output from the Simandou project, Rio Tinto has set its total iron ore sales target for 2026 at 343 million to 366 million tons, an expected increase of 24 million tons compared to the total sales in 2025.

Non-mainstream iron ore projects also contributed to the increase. The Onslow iron ore project has been ramping up production since it started operation in the second quarter of 2024, and its output in September 2025 was close to the designed capacity. Restricted by factors such as logistics, it is expected to achieve stable production reaching the designed capacity in the first quarter of 2026, with the project's output in 2026 projected to increase by approximately 7 million tons year-on-year. In addition, the Tonkolili iron ore project in Sierra Leone and the ArcelorMittal Liberia Phase II project, among others, are expected to see year-on-year growth in iron ore output in 2026.

Overall, the current steel market is in the traditional off-season for consumption. Weak downstream consumption expectations coupled with insufficient enthusiasm among traders for winter stockpiling will restrain the upward trend of steel prices. Meanwhile, steel mills are operating with low profits, the room for recovery in molten iron output is limited, and the growth in iron ore consumption is sluggish. Port inventories are at a high level compared to the same period in history. The total supply from the four major mining companies and non-mainstream mining enterprises is expected to increase year-on-year in 2026, and the supply-demand pattern of the iron ore market tends to be loose. However, the overall sentiment in the current commodity market is positive, providing certain support for iron ore prices.

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