Iron ore prices are holding strong

23 February, 2022

It looks like the iron ore prices are holding strong. The iron ore price is forecast to remain above $US100 per tonne (t) into 2023. Chinese demand has continued to increase, and supply remains stable.

It was previously forecast to dip to $90/t in 2022, before falling to $75/t in 2023. However, these figures have been revised to $120/t and $110/t, respectively.

“While we expect iron ore prices to see some weakness in the coming days from spot levels over the Chinese crackdown, we believe this will only be temporary,” Fitch stated.

“In fact, we believe that prices will receive support from supply constraints and renewed Chinese demand strength in 2022, such that the annual average iron ore price for 2022 and 2023 will remain above pre-COVID-19 levels.”

China’s increase in demand for iron ore is a result in their governments aim to renew stimulus towards the infrastructure sector. 

However, the weather may affect production due to an estimated average to above average number of cyclones in 2022.

“As major miners are focussing on value over volume in FY22, with announced production targets still being subject to multiple risks (for instance, the Australian BoM has predicted an average to above average number of cyclones in 2022), we expect global iron ore supply to remain constrained this year,” Fitch stated.

Past 2023, Fitch predicts prices to decline below $100/t from 2025, hitting $50/t by 2031.

This article is an extract from Australian Mining.