Iron ore is moving toward 2026 on a positive momentum, although analysts warn about a constrained upside potential. A new study from BMI shows elevated prices, yet a gradually loosening market owing to Simandou development in Guinea and a slower steel cycle in China.
BMI projects an average iron ore price of $95/ton in 2026, slightly below the estimated $97/ton for 2025, Kallanish reported. The slight decline is due to rising seaborne supply and macroeconomic pressures in China.
The research firm highlights how Beijing’s policy stance continues to prioritize consumption-led growth. Meanwhile, large-scale infrastructure and real-estate support remain limited. This recalibration directly affects steelmaking and, by extension, iron ore demand.
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Demand Side Weakness
China’s official manufacturing PMI contracted for the seventh consecutive month, printing 49 in October. Persistent weakness in factory activity is now evident, while a continued decline in new-home prices suggests a subdued outlook for construction steel.
BMI expects that China’s annual iron ore consumption will peak before the end of this decade. The firm cites a structural shift toward less steel-intensive sectors and accelerating global adoption of low-carbon steelmaking. These processes rely more on electric arc furnaces, which require significantly less iron ore than traditional blast furnace production.
Thus, BMI set the anticipation for a multi-year downtrend, with ore prices falling from $95/ton in 2026 to $78/ton by 2034.
Supply Side Caution
On the supply side, major producers continue to operate with stability, though Vale SA (NYSE:VALE) has moderated its medium-term expectations. According to Bloomberg, the Brazilian miner reduced its 2026 production forecast to 335–345 million tons, down from the previous 340–360-million-ton range.
The company has also tightened its investment strategy. Capex guidance now stands at $5.5 billion, after two downward revisions. A disciplined approach is not surprising given the market dynamics.
Supply growth elsewhere is accelerating, while the demand from the largest market shows limited upside. Although the short-term thesis remains stable, the decision to avoid aggressive expansion is reasonable.
Meanwhile, Vale is looking toward copper as a promising outlet for growth. During Tuesday’s presentation in London, the firm confirmed an ambitious plan for 700,000 tons of copper annually by 2035.
To achieve this goal, Vale is partnering with Glencore (OTCPK: GLCNF) to launch a $2 billion joint venture in Ontario’s Sudbury Basin.
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