Iron ore 62% Fe fines are trading at $102/t on the SGX Asia Pacific, largely unchanged on the session. The market has traded in a relatively narrow $95-115/t range for most of 2026, supported by Chinese steel production that has remained resilient despite the property sector downturn but capped by the looming supply overhang from the Simandou project.
The Simandou mine in Guinea, one of the world's largest high-grade iron ore deposits, began shipments in November 2025 and is ramping up toward its full capacity of 120 million tonnes annually. The project is a joint venture involving Rio Tinto and Chinese state-owned enterprises including China Baowu. Its full ramp-up could significantly contribute to global supply from 2026 onward.
China imported approximately 75% of the world's seaborne iron ore in 2025. Chinese steel production has proven more resilient than expected, with crude steel output of approximately 1.0 billion tonnes in 2025, only marginally below the 2020-2021 peak. However, the long-term trend is toward lower steel production as the property sector continues to contract and the economy shifts toward services.
Major iron ore producers are adjusting strategies in anticipation of a structurally looser market. BHP is capping its Pilbara output at 305 million tonnes and shifting focus toward copper and potash projects, where demand growth prospects are stronger. Vale and Rio Tinto are facing logistics and weather-related disruptions that have tempered their ability to increase output.
Earlier concerns of a 50-million-tonne surplus in 2025 have been revised closer to 20-30 million tonnes as Chinese steel production proved more resilient than expected and supply disruptions at major producers moderated output growth. The actual surplus is now likely to be in the 20-30 million tonne range.
Iron ore at $102/t is near the middle of the expected range. With Simandou ramping up, the medium-term risk skew is to the downside. Buyers should avoid building large fixed-price inventories at current levels. Consider shorter-term contracts (1-3 months) and use floating price indexation to capture any downside from the Simandou supply overhang.