Australia: Govt predicts dip of $12/t y-o-y in average iron ore prices in 2025

• Iron ore supply to continue outpacing demand in 2025
  
  
• China to cut steel output further amid realty sector woes
  
  

Mysteel Global: Australia's Department of Industry, Science, and Resources predicts that spot prices of 62% Fe grade iron ore will average US$80/tonne (t) (FOB, Australia basis) in 2025, lower by a marked $12/t from this year's estimated average of $92/t, according to its latest quarterly resources and energy report. The softening outlook for iron ore prices was mainly attributed to a strong supply of the raw material against weak steel demand.

During the current October-December quarter, iron ore prices have been volatile, rising and falling in line with market sentiment associated with economic policy announcements in China, the report said. However, over the past year, iron ore prices have tracked downward on the whole, due to the imbalance between supply and demand of the commodity, and this is certain to extend into the next year, the department said.

On the supply side, Australia and Brazil, the world's two largest iron ore producers, are expected to increase their export volumes by 1.4% and 2.6%, respectively, in 2025 from this year, the report stated. The growth in their iron ore exports will stem from the ramp-up of greenfield projects by major Australian miners and the expansion in production by Brazilian mining companies Vale and Companhia Siderurgica Nacional.

For Australia alone, iron ore production is seen climbing up by 2.5% y-o-y to 982 million wet tonnes in 2025, the report notes.

Meanwhile, world steel demand is expected to recover gradually next year, with global output projected to rise by 0.9% y-o-y to 1.9 billion tonnes. However, the top steel producer, China, will continue to cut its output, as the country's property woes seem unlikely to be solved any time soon, according to the report.

As a result, overall demand for iron ore will remain sluggish and weigh on prices for the foreseeable future. The declines forecast in iron ore prices for 2025 will continue in 2026, the Department added, predicting that the spot price for 62% Fe grade iron ore could fall further to an average of $76/t in 2026.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.