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Mark O' Donnell
 · 
Research Analyst
November 8, 2022
 · 

Factors that affect iron ore prices

  • Like with other commodities, iron ore prices are heavily affected by shifts in demand
  • China is a defining factor for iron ore prices
  • The global market for iron ore is estimated to reach 2.7 billion metric tons by 2026 from 2.3 billion metric tons in 2022
Iron ore

The price of iron ore is very volatile. Like with other commodities, iron ore prices are heavily affected by shifts in demand, the availability of supply and even political issues that may impact the delivery to purchasers of the product. 

China is a defining factor for iron ore prices. It is the world's largest consumer of the commodity and imports around 80% of the iron ore it uses every year despite being the third-largest producer. 

Fitch Solutions' Global Iron Ore Mining Outlook expects accelerated improvement in the production of iron ore between 2022 and 2026. It noted that the main drivers of growth would be Australia, the accelerated production in Brazil and the stabilization in Mainland China's ore output. The outlook added that China will invest heavily on mines offshore to improve the security of iron ore import supply, with Guinea tipped to become one of the most essential beneficiaries of the trend. 

In March, Global Industry Analysts Inc. released the results of a new market study titled "Iron Ore - Global Market Trajectory & Analytics." The study expects the stabilization of the COVID-19 pandemic to benefit the industry and facilitate gradual return to normalcy of primary steel-consuming nations. The global market for iron ore is estimated to reach 2.7 billion metric tons by 2026 from 2.3 billion metric tons in 2022, reflecting a 3.7% compound annual growth rate. Demand from China is anticipated to grow 4.1% annually to 1.6 billion metric tons in 2026. 

Iron ore production is expected to reach 3.17 billion metric tons in 2026, reflecting a 5.59% compound annual growth rate from 2022. However, ResearchAndMarkets.com's "Global Iron Ore Market (Production, Demand, Export and Import): Insights & Forecast with Potential Impact of COVID-19 (2022-2026)" report warned that the growth of the market would be challenged by trade war and increased prices of raw materials, as well as huge capital requirements. 

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