Australian mining giant BHP has released the August 2025 issue of its economic and commodity outlook, highlighting resilience in bulk commodity demand despite global trade uncertainties. Policy shifts, tariffs, and industrial interventions have defined the year, impacting trade flows and investment decisions. Yet, demand for iron ore, steelmaking coal, and steel has remained strong, particularly in emerging markets.
Iron ore market: 305 million mt output target
In the first half of this year, the iron ore price was relatively steady compared to the first six months of the previous year. The market was supported most recently by the elevated blast furnace run rate in China and several disruptions to iron ore supply, including weather-related impacts to seaborne supply and the extended impact of safety inspections at Chinese domestic iron ore mines. This led to iron ore inventory in major Chinese ports declining. With seaborne supply expected to normalize in the near term, port stocks in China are expected to rebuild over the coming year. While China’s infrastructure spending and India’s rising steel output have helped stabilize demand, new supply from Guinea’s Simandou project and expanded Brazilian capacity could pressure prices further.
Meanwhile, BHP confirmed its position as the world’s lowest-cost iron ore producer, with Western Australia Iron Ore (WAIO) operations reaching a record 290 million mt in the fiscal year 2025. Production is forecast to rise to 305 million mt per year by 2028.
Steelmaking coal: pressured by oversupply
In the fiscal year 2025, the steelmaking coal market softened due to oversupply. Prices fell, though some recovery is expected as China eases policies and new blast furnace capacity comes online.
BHP also warned about Queensland’s coal royalties, which impose a tax burden of nearly two-thirds of profits. Prolonged high rates may force BHP to reconsider operations in the state.
Global steel and pig iron dynamics
China has maintained an annual steel output of over 1 billion mt, a level that has now been sustained for six consecutive years. This stability was underpinned by policy support for infrastructure and manufacturing, as well as export activity brought forward in anticipation of future trade barriers. At the same time, India emerged as a powerful growth driver. Its steel production has continued to rise rapidly, offsetting weaknesses in Europe and advanced Asian economies.
Demand for pig iron in China is expected to decline gradually, reflecting both a maturing infrastructure cycle and increased reliance on steel scrap as part of the country’s decarbonization pathway. By contrast, India and other emerging economies are expected to maintain robust pig iron demand, driven by continued industrialization.
Country focus: China
China’s steel sector is stabilizing despite real estate weakness. Other areas of the economy such as large-scale infrastructure projects and manufacturing have provided stability, with major projects such as the Tibet hydropower dam alone requiring 11 million mt of steel. Government priorities on high-quality steel and scrap usage are reshaping long-term demand.
Country focus: India
India is set to become the world’s largest source of steel demand growth over the next 25 years. Its steel consumption is expected to quadruple, supported by urbanization, industrialization, and infrastructure expansion. This will counterbalance China’s plateau and fuel long-term iron ore and coal demand.
Long-term megatrends
BHP identified four megatrends shaping steel demand through 2050:
- Urbanization and rising living standards.
- Capital stock renewal and infrastructure expansion.
- Decarbonization driving low-carbon steel production.
- Scrap and hydrogen adoption in green steel pathways.
These trends will sustain demand for iron ore and steelmaking coal, even as production methods evolve.
Risks and opportunities
Risks: trade protectionism, oversupply, and high taxation.
Opportunities: India’s accelerating demand, global green steel initiatives, hydrogen-based reduction, and emerging market urbanization.