Iron ore procurement fundamentals have shifted decisively in favor of buyers. Fitch forecasts 62% Fe averaging $90/t in 2026, the Australian government sees $79-85/t by 2026-27, and Steelonthenet projects $90/t in 2026 and $75/t in 2027. Deutsche Bank is more bullish at $102/t average for 2026 but notes a surplus bias in H2.
China Mineral Resources Group (CMRG), established in July 2022, is centralizing Chinese iron ore procurement. The state-backed entity coordinates purchasing across hundreds of domestic steel producers, reportedly advising mills not to hold discussions with individual suppliers on specific products. This consolidation weakens miners' pricing power.
Port inventories at 160 Mt provide a substantial buffer against supply disruptions. Analysts note that Chinese mills are maintaining inventory-light procurement, prioritizing near-term needs and avoiding speculative builds. The current pricing has firmed a cost floor around $95-100/t, but the medium-term trend points to gradual price erosion.
Trade flows are shifting toward higher-grade material. High-grade fines are gaining share while pellets face weaker demand due to suppressed steelmaking margins. The rerouting of global supply chains is making high-grade material more available in the CFR China market, creating opportunities for buyers to improve furnace productivity without paying historic premiums.
The 2026-27 iron ore market favors disciplined, short-cycle buying. Maintain inventory-light positioning with a buy-as-needed approach. Use the growing availability of high-grade material to optimize blast furnace productivity. Leverage the CMRG-driven shift in pricing power toward buyers when negotiating contract terms.