Since the start of 2025, prices of iron ore, one of the world’s most-traded commodities, has been virtually glued to the $100 mark, where it opened the year. From this year’s peak in February to its June trough, the price swung by less than 16%. That compares with a trough-to-peak rise of roughly 30% in copper and 50% in gold.
On Thursday, the commodity fetched $104 a metric ton, according to S&P Global Commodity Insights.
“The trade’s flagship price—62% grade fines, landed in China—has stuck to the $100-a-ton level this year like its life depends on it,” said Panmure Liberum analyst Tom Price. Since mid-July, the price has kept firmly within a $10 band.
That is despite reports from Bloomberg in recent weeks that said China had urged mills to suspend purchases of one of BHP Group’s popular iron-ore products, and thereafter banned nearly all new cargoes from the mining giant in a dispute over prices.
The market isn’t always so sedate: Last year, the benchmark price fell by 38% peak to trough, weighed by the crisis in China’s property market, while in 2021, slowing Chinese steel output triggered a 63% fall.
The “odd stability” in prices reflects a recent balance between China’s subdued steel demand and robust growth in iron-ore supply, said Price.
“We suspect, too, that ‘CMRG’—China’s ore trade watch dog—has spooked the speculators out of this trade,” he said. CMRG, or China Mineral Resources Group, is a state-run iron-ore buyer set up by Beijing three years ago to help China get more influence over prices.
China’s reported dispute with BHP—the world’s No. 1 miner and third-biggest iron-ore supplier—could add fuel to what many say is a downbeat picture for the commodity. RBC Capital Markets analyst Kaan Peker called it “a negotiating tactic, most likely an effort to secure lower long-term prices.”
BHP declined to comment.
China has long sought more power over the price of iron ore, a market dominated by a few huge miners in Australia and Brazil. The country mines a fraction of the ore it needs to produce more than half of the world’s steel.
A number of analysts have raised concerns that a plan by China to reduce nationwide steel production might curb iron-ore demand heading toward year-end, pressuring prices. Recent output cuts appear to have come from scrap-fed electric arc furnaces, but more reductions will be needed to reach Beijing’s goal and that is likely to include blast furnaces that rely on iron ore, analysts say.
A squeeze on margins at China’s steel mills also bodes poorly for iron-ore prices, Commonwealth Bank of Australia analyst Vivek Dhar said in a recent note to clients.
“Falling steel mill margins typically reduces iron-ore demand and prices because steel mills are discouraged to produce steel,” he said. “A downward correction in iron-ore prices looms as a possibility in coming weeks.”
Iron ore often dips at this time of year because of a mix of seasonal factors including rising iron-ore shipments. This year, the market is shifting from a shortfall to oversupply, and a huge new mine in Africa called Simandou is also nearing first production.
Analysts at Macquarie say they are cautious on the outlook for iron ore, despite recently upgrading price forecasts for the next few years because of stronger Chinese demand than previously envisaged.
The Macquarie analysts expect prices to fall to an average $98 a ton in the final quarter of the year, and $90 over 2026. That is broadly in line with market consensus, they said.
Lower iron-ore prices would be a drain on profits for some of the world’s biggest miners, which rely on the steel ingredient for much of their income and have been using that cash to raise bets on copper, a commodity they expect will be essential to the clean-energy transition and artificial-intelligence boom. Investors typically bet on iron ore via stocks of the companies that produce it.
To be sure, analysts have forecast downturns in the China-dominated iron-ore market previously that never eventuated.
Stronger-than-expected crude steel output could fuel demand, or more stimulus from Beijing—particularly support for steel-intensive infrastructure investment—could give sentiment a boost. Cuts to steel production also have the potential to support iron-ore prices should they result in higher margins for steelmakers, allowing mills to pay more for better-grade ore.
There is also more supply from high-cost iron-ore mines than there used to be, which could cushion any fall in prices. BHP estimates cost support at $80 to $100 a ton, and reckons that for prices to sustain a fall below that range, there would need to be a drop in demand or increased supply from low-cost producers.
Any disruption to BHP cargoes that results in a reshuffling of trade flows could also provide near-term support to prices.
Morgan Stanley analysts forecast the commodity to hold up better than consensus estimates, though they don’t think prices can rise without major Chinese stimulus.
For the next few days, the market is expected to be quiet because of China’s “golden week” holiday, which runs through Oct. 8. But the days of steady iron-ore prices might be numbered.
Panmure Liberum is more bearish on iron ore than any other mined commodity on a 12-month horizon. The U.K. investment bank expects prices to average $90 in the fourth quarter and $71 next year.
“Sure, everything’s nicely balanced now,” said Panmure Liberum’s Price. “But downside risk for iron-ore prices is building.”
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com