Research agency BMI maintains that the iron-ore price will average $100/t this year, with expected subdued demand and weighed down prices as a result.

Although iron-ore will remain supported by renewed optimism over easing trade tensions, BMI says the risks remain skewed to the downside owing to looming steel production curbs in mainland China.

BMI explains that iron-ore with 62% iron content at Qingdao port is currently hovering at about $94.70/t as of May 6, with the year-to-date average in 2025 so far being $96.50/t.

While maintaining relative resilience in early 2025, reaching a year-to-date high of $102.90/t on February 21, supported by weather-induced supply disruptions and Chinese demand optimism, iron-ore prices failed to sustain positive momentum, consistently trending below $100/t throughout March and April.

“The market sentiment turnaround - largely driven by dwindling demand owing to the lingering risk of a deceleration in economic growth in major markets amid heightened trade tensions, announced steel production curbs in China, along with the prolonged Chinese housing market downturn - has emerged as a dominant factor dragging prices down,” BMI states.

Iron-ore prices will also remain sensitive to any stimulus announcements from China, with the outlook being heavily contingent on the trajectory of upcoming trade policy developments. A fresh wave of monetary easing in China and potential trade deal negotiations between the US and China could work to limit iron-ore’s downside potential.

According to World Steel Association, China’s production of crude steel grew by only 0.6% year-on-year in the March quarter, which is a major demand source for the commodity. China’s iron-ore imports decreased by 5.5% year-on-year in January to April to 388-million tonnes.

Globally, crude steel production decreased by 0.4% year-on-year during the March quarter, barring select examples such as India and Brazil which recorded 6.8% and 2.8% year-on-year growth rates in crude steel production in the same quarter. 

SUPPLY

On the supply side, BMI expects iron-ore production to remain solid across major mining regions, which will work to limit any potential upside for iron-ore prices.

Iron-ore shipments and production broadly increased or remained largely unchanged for most majors, with miners aiming to maintain their production levels, despite early-year weather-related challenges.

Notably, Vale's iron-ore production declined by 4.5% year-on-year in the March quarter, with the miner maintaining its 2025 guidance at between 325-million and 335-million tonnes, compared with the 328-million tonnes produced in 2024.

While Rio Tinto's shipments fell by 9% year-on-year during the same quarter, the company also left its 2025 guidance unchanged at between 323-million and 338-million tonnes.

In contrast, BHP saw an increase in iron-ore production of 1% year-on-year to 193-million tonnes during the first nine months of the 2025 financial year and expects its full-year output to be between 255-million and 265-million tonnes, compared to the record level 260-million tonnes produced in the 2024 financial year.  

Fortescue's iron-ore shipments also edged higher during the first nine months of the 2025 financial year to 143-million tonnes, with the miner maintaining its iron-ore shipments guidance for the full year at between 190-million and 200-million tonnes, compared with the 191-million tonnes produced in the 2024 financial year.  

OUTLOOK

Over the longer term, iron-ore prices are likely to follow a multi-year downtrend, with prices forecast to decline from $100/t in 2025 to $78/t by 2034.

BMI says cooling steel production growth and higher iron-ore output from global producers will continue to loosen the market.

China’s slowing demand growth will be the main driver of lower prices, a trend that is already in its early stages. “A structural shift away from industrial, steel-intensive sectors towards services and less steel-intensive infrastructure will have a negative impact on iron-ore demand,” BMI explains.  

The agency adds that this shift in China’s economic growth trajectory is expected to depress steel consumption and production growth rates.

While domestic steel production was allowed to significantly outstrip steel demand over the past decade, with the resulting surplus exported, BMI expects production growth to be brought more closely in line with domestic consumption patterns in the coming years.

Based on these forecasts, BMI anticipates China’s yearly iron-ore consumption to peak before the end of the decade, while iron-ore demand across Asia more broadly will continue to grow, but at a slow rate.

Prices could, however, head even lower than BMI’s current outlook if China’s economic momentum is weaker than expected. On the upside, a stronger recovery in China’s property sector could be a major demand driver, which supports higher prices.