By Bloomberg News
March 2025
Iron ore prices have swung between gains and losses in recent weeks as global markets grapple with uncertainty around steel production cuts and the impact of US tariffs. Despite a brief rally, prices remain relatively flat this year, following a sharp decline of over 25% in 2024.
Amidst this volatility, Andrew Forrest, chairman of Fortescue Ltd., the world’s fourth-largest iron ore miner, expressed cautious optimism about China’s economic resilience. Following a meeting with Chinese Premier Li Qiang, Forrest stated he was encouraged by China’s commitment to sustaining its economic growth, which could drive future steel demand.
Iron Ore Prices: A Volatile Trend
Iron ore futures experienced mixed movements on Wednesday, with prices briefly rising by 0.8% before settling around $101.50 per ton.
- Singapore futures dropped marginally by 0.1% to $101.50 per ton at 11:33 a.m. local time.
- Dalian Exchange futures in China, priced in yuan, saw modest gains.
- Meanwhile, steel contracts in Shanghai remained mixed, reflecting uncertainty in the sector.
Iron ore prices have been on a downward trend since 2024, driven by:
- Steel output cuts in China to curb emissions.
- US tariffs on steel and aluminum imports, which have disrupted market sentiment.
- Reduced construction demand in China amid a slower-than-expected economic recovery.
Andrew Forrest’s Optimism on China’s Economic Strength
Despite market uncertainty, Andrew Forrest, the billionaire founder of Fortescue Ltd., remains hopeful about China’s economic outlook.
Speaking at the Boao Forum in Hainan Province, Forrest shared insights from his meeting with Chinese Premier Li Qiang, highlighting:
- China’s commitment to maintaining its growth trajectory.
- Optimism about infrastructure spending and renewed steel demand.
- Confidence that China is “serious about building its economy” despite current market challenges.
“China’s message is that it’s going to stay the course,” Forrest stated, referring to Beijing’s domestic consumption policies and its determination to stimulate end-demand for steel.
US Tariffs Add to Market Volatility
Iron ore prices are also being influenced by the US tariff announcements, which have fueled uncertainty.
- The Biden administration’s tariffs on Chinese steel and aluminum have raised concerns about global trade tensions, adding pressure to commodity markets.
- Tariffs have created pricing instability, making it difficult for steel producers to predict input costs, thereby reducing buying activity.
Forrest warned that tariffs act as a “sugar hit”, providing a short-term boost to local industries but posing a long-term risk to the global economy.
Impact of Steel Output Cuts on Iron Ore Demand
China’s steel production cuts, aimed at reducing carbon emissions, have also weighed heavily on iron ore prices.
- Lower steel output means reduced demand for iron ore, capping any potential price gains.
- Chinese regulators have instructed steelmakers to limit production to curb emissions and meet carbon neutrality targets.
- This has led to fluctuating iron ore prices as the market struggles to gauge future demand.
China’s Construction and Manufacturing Outlook
While iron ore prices remain volatile, China’s economic policies could provide some relief.
- Beijing is rolling out infrastructure stimulus measures, which could increase steel demand and stabilize iron ore prices.
- However, the property sector slump in China continues to be a drag on construction-related steel consumption.
Analysts remain cautiously optimistic, noting that:
- Industrial activity is gradually picking up.
- Government-backed infrastructure projects could boost steel consumption.
- However, weak consumer confidence and sluggish real estate activity remain headwinds.
Market Outlook and Analyst Expectations
Iron ore prices are expected to remain range-bound in the near term as traders await clearer signals on:
- China’s economic policies and steel production plans.
- US tariff developments and their impact on global trade.
- Seasonal demand patterns as construction activity ramps up in the second quarter of 2025.
Analyst predictions:
- Goldman Sachs anticipates iron ore prices to hover around $100–$110 per ton for most of 2025, citing weak global demand and steel output constraints.
- Morgan Stanley projects a moderate price recovery in the second half of 2025, driven by Chinese infrastructure projects and reduced supply from Australian and Brazilian producers.
Conclusion
Iron ore prices are caught in a tug-of-war between steel output cuts, US tariffs, and China’s economic resilience. While prices remain flat for now, stimulus measures in China and potential infrastructure growth could provide support. However, the uncertainty surrounding US-China trade tensions and volatile steel production levels will continue to weigh on the market.
As global iron ore markets remain highly sensitive to policy changes and trade dynamics, investors will be closely watching China’s steel output trends and the US tariff policies for further direction.
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