Iron ore prices to stay stable, says report

New Delhi

Iron ore prices are expected to remain steady between USD 80 and USD 100 per tonne over the next 12 to 18 months, according to a Moody’s report. The stable price range is due to weak demand and a rise in global supply.

Moody’s said large iron ore producers are increasing output from existing and new mines. Extra supply from new regions, including parts of Africa, will further raise availability. Despite possible price drops, low-cost producers will continue to operate profitably, ensuring stable supply.

High-cost producers may exit the market if prices fall too low, but affordable supplies from African projects—like the Simandou mine in Guinea—could bring in 120 million tonnes of high-grade iron ore yearly. This will impact global trade flows and likely put further pressure on prices.

On the demand side, weak global manufacturing and slow construction activity are keeping steel demand low. Major markets like China, Japan, Korea, and the European Union continue to face low real estate activity, reducing their need for steel.

Since China imports most of the world's seaborne iron ore, any slowdown in Chinese steel production will directly hurt global demand. The report warns of a structural decline in steel production, which will further reduce demand for iron ore.

Together, strong supply and weak demand will limit major price changes. Moody’s expects this balance to result in steady prices without big jumps or falls. However, large producers may face limited earnings growth during this time due to lower steel consumption and pricing pressure.