Global iron ore prices to fall on ample supply: OCE

Global iron ore prices are expected to fall over the medium term on higher global supply, declining demand from Chinese steelmakers and growing low-carbon steelmaking alternatives, according to the Australian government's commodity forecaster, the Office of the Chief Economist (OCE).

Australia's iron ore exports are forecast to peak in 2028 at 950mn t and fall to 905mn t in 2031, OCE data from 2 October show (see table). Global steel production is expected to approach 2bn t/yr by 2031, with lower output in China to be offset by higher production in India, southeast Asia and the US, the OCE said.

Steel production in advanced economies will be constrained by weak construction, lower household purchasing power and tight financing, while India and southeast Asia will drive demand through urbanisation, infrastructure investment and steel-intensive manufacturing, the OCE said.

The share of steel produced using electric arc furnace (EAF) technology is forecast to rise above 34pc by 2031, from 30pc in 2025, which will weaken demand for iron ore and metallurgical coal, the OCE said.

At the same time, global iron ore supply is increasing. The ramp-up of Simandou mines in Guinea, Africa's largest high-grade iron ore deposit, adds to already ample global supply and could increase competitive pressure on higher-cost and lower-grade producers, the OCE noted.

Iron ore prices are forecast to fall on growing supply over the medium term, reducing Australia's export earnings from $107bn in the financial year to June 2027 to $87bn in 2030-31, in nominal terms.

Coking coal

Australia's metallurgical coal exports are expected to reach 165mn t in 2028 and fall to 157mn t in 2031, remaining above 2026 export forecasts of 155mn t, the OCE said.

Coking coal supply and demand are expected to remain broadly in balance to 2031, according to the OCE. But metallurgical coal markets have been disrupted by several pressures in 2026 such as adverse weather, higher diesel prices stemming from the US-Iran war and mine shutdowns in China following a deadly mine accident in Shanxi.

By Emma Partis