- Strong supply, weak demand likely to pull down prices
- Crude steel output projected to fall 0.2% y-o-y in CY’25
Mysteel Global: Australia’s Department of Industry, Science and Resources (DISR) predicts that spot prices of 62% Fe grade iron ore fines will average $83/tonne (t) (FOB, Australia basis) in 2025, slightly lower than its previous forecast of $85/t the department issued at the end of March and well below last year’s average of $93/t, according to the department’s latest Resources and Energy Quarterly report published on 30 June.
The DISR says it reduced its ore price forecast to reflect the soft outlook for the commodity due to strong supply prospects and weaker steel demand, the report pointed out.
Global steel production during January-April this year dropped by 0.3% y-o-y to 624 million tonnes (mnt), reflecting the trend of slowing output that has persisted since 2021.
For the remaining half of this year, global steel production is expected to stay weak due to increased trade barrier uncertainties and planned crude steel output cuts in China. The output volume for the whole of 2025 is projected to fall by 0.2% y-o-y, the report said.
On the one hand, global iron ore supply is on pace to rise steadily with new supply coming online in Australia, Brazil and Africa, the report observed, forecasting that global iron ore supply will increase by 0.9% per year during 2025-2027.
Over the past April-June quarter, iron ore spot prices had dropped in early April following the higher steel import tariffs announced by the US government, before picking up slightly later and moderating in June. The average spot ore price for the past quarter was $93/t, the report said.
Ore prices have changed little since China’s announcement of steel output curbs in May, but prices may see some notable declines in the future if the proposed output cuts in China are more severe than expected, DISR warned.
Conversely, any additional policy support provided by the Chinese government to achieve the country’s GDP growth target of “about 5%” in 2025 would help to bolster steel demand and thus iron ore prices, the report added. Longer term, the report predicted that under the pressure of the ore supply glut, the average spot price for 62% Fe grade iron ore will decline further to $74/t in 2027.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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