The Government’s forecasts of the iron ore price have been consistently wrong. So, what are their latest predictions for this year and next? China’s economy is slowing, they say, and global mine output is rising, mostly attributed to Rio Tinto's Simandou mine in the Republic of Guinea, the world's largest untappped high-grade deposit to start operations later in the year.
So the Government expects iron ore prices to fall hard to around US$80 a tonne this year, and then keep falling further in 2026 to just US$76 a tonne. For now, iron ore is holding steady, just above US$100. If you want to dive into the full 130-page report, you can do so here.
Or you could save yourself the time and consider this: commentators have been bearish on China and, by default, on the price of iron ore for quite some time, because they look at China with Western eyes but China is different, it's a command economy. Take Trump's tariffs which theoretically will impact Chinese exports but China will respond with more stimulus, and iron ore prices are pegged to China's stimulus.
Furthermore, iron ore shares had Trump's tariffs priced into them months ago when his election win became a certainty. And yet, the market has not yet priced in the impact of the stimulus which is also a certainty. Of course, the Chinese could always back down and not stimulate but would they? I don't think so. At worst, iron ore prices will stay around US$100; at best, they will soar (again!) in 2025.
Of course, I live and breathe the iron ore price as well as BHP's share price, and twice a year - in March and September - I even feast on BHP's share price when they pay out their dividends (and I feast one more time when the franking credit refunds roll in after 30 June). No wonder, I watch out for their financial results, of which the half-yearly ones for the six months ended 31 December 2024, have just now been published.
If you're as interested as I am, click here.
