Australia remains the world’s largest holder of iron ore resources and the largest producer, exporting 923 million mt of iron ore in 2025, according to the quarterly outlook report by Australia’s Department of Industry, Science and Resources.
While export volumes are expected to increase in the near term, export earnings are forecast to decline over the outlook period as prices soften. Exploration activity is expected to remain strong as producers seek to replace depleting reserves.
Global trade patterns expected to shift
Global steel demand is projected to continue increasing gradually through 2031, driven mainly by India, other Asian countries and the Middle East, while China’s steel consumption and production are expected to edge down over the same period. As a result, world iron ore trade is forecast to remain broadly stable, although trade patterns are expected to shift. China’s iron ore imports are projected to decline at an average annual rate of 1.8 percent, while imports by India and other Asian countries are expected to rise. On the supply side, Australia is expected to remain the largest exporter, although exports from Brazil and African producers, particularly Guinea, are forecast to increase steadily.
Global iron ore supply is expected to rise as additional production comes online in Australia, Brazil, Canada, India and Africa. In Brazil, Vale expects iron ore production of 335-345 million mt in 2026, while exports are projected to increase further by 2031 through expansions. Guinea’s Simandou project, which began operations in late 2025, is expected to reach annual capacity of 120 million mt by 2030, providing additional high-grade ore to the seaborne market.
China demand to weaken as scrap use increases
China’s iron ore imports remained resilient during the first quarter of 2026 despite weaker steel production. Imports increased by 11.2 percent year on year, while steel output declined by 4.2 percent. Imports from Australia rose by 8.8 percent following the removal of restrictions on some BHP products after a new long-term sales agreement was signed between BHP and the China Mineral Resources Group (CMRG) in April 2026. However, China’s port inventories exceeded 160 million mt during the March quarter, reaching a five-year high. Over the outlook period, China’s increased use of scrap and electric arc furnace steelmaking is expected to reduce iron ore import requirements.
India is expected to become an increasingly important source of iron ore demand as steelmaking capacity expands. However, the pace of import growth will depend on domestic mine development and supporting infrastructure. New export taxes introduced by Indian state governments on high-grade iron ore producers are expected to increase production costs and reduce India’s iron ore exports over the outlook period.
Prices expected to trend lower through 2031
Iron ore prices remained broadly stable throughout 2025 before falling during the Chinese New Year period in early 2026. Prices subsequently recovered, rising above $110/mt CFR China in May 2026 following higher freight costs associated with the Middle East conflict.
Nevertheless, the report states that the longer-term trend remains one of declining prices as global supply increases and Chinese demand moderates. The benchmark 61 percent Fe iron ore price is forecast to average $91/mt in 2026 before declining to $64/mt in real terms by 2031. Despite lower prices, Australian producers are expected to remain highly competitive, with average cash production costs estimated at around $33/mt in 2025.
Export volumes to peak before easing
Australia’s iron ore export volume is expected to peak over the next two years as production from Fortescue’s Iron Bridge, Mineral Resources’ Onslow and BHP’s South Flank continues to ramp up.
Export volumes are then projected to ease slightly in the latter part of the outlook period as Chinese demand weakens and African supply expands. Australian iron ore production is forecast to increase from 972 million mt in 2025-26 to just over 1 billion mt during 2026-29 before declining to 958 million mt by 2030-31. Exports are forecast to rise from 926 million mt in 2025-26 to a peak of 938 million mt before easing to 905 million mt by 2030-31.