The iron ore market has been locked in a $100-110/dmt trading range for three months, reflecting the lack of major catalysts on either the supply or demand side. The range is historically normal and reflects the mature, well-supplied nature of the seaborne iron ore market.
Seaborne iron ore supply is growing at approximately 2% annually, driven by Rio Tinto's Gudai-Darri mine ramp-up, BHP's South Flank project, and Vale's gradual production recovery. The Big Three miners continue to invest in sustaining and slightly expanding capacity.
Chinese steel production is expected to be roughly stable in 2026 at 1.05 billion tonnes, in line with government policy to cap output. The stability in Chinese steel output provides a predictable demand profile for iron ore, unlike the volatile boom-bust cycles of previous decades.
The cost curve for iron ore provides a floor near $80/mt, below which significant volumes of Chinese domestic production and high-cost seaborne supply are uneconomic. The ceiling near $120-130/mt is set by the marginal cost of incentivizing additional supply.
Non-Chinese steel production — in India, Japan, South Korea, and Europe — provides additional demand diversification. Indian steel production is growing at 6-8% annually, making India an increasingly important iron ore consumer.
The $100-110/mt range offers stable procurement conditions. Mills should maintain normal inventory levels and avoid building speculative stockpiles. The market offers no compelling reason to extend forward coverage beyond standard requirements.