Australian investment bank Macquarie Group has maintained its forecast for iron ore prices to average $103/mt in 2026, stating that prices remained relatively resilient during the first half of the year mainly because of higher freight rates and rising production costs rather than stronger market fundamentals, according to a report by Bloomberg.
The bank also maintained its forecast for iron ore prices to average $100/mt during the third quarter and estimated that elevated freight rates have lifted the industry’s cost floor to around $85/mt.
Market focus expected to shift back to supply and demand
Macquarie said support from freight markets is likely to weaken as attention returns to underlying market fundamentals. According to the bank, faster-than-expected production from the Simandou iron ore project in Guinea is expected to contribute to global supply growth.
During the first half of the year, strong bauxite exports from Guinea and longer-haul shipping routes supported Capesize freight rates, helping sustain iron ore prices. However, iron ore prices have weakened over the past week, falling below $100/mt for the first time since March amid abundant supply and high inventory levels.
Chinese steel demand remains resilient
Despite weaker iron ore prices, Macquarie noted that Chinese steel demand has remained stronger than expected, with hot metal production continuing near the upper end of seasonal levels. The bank cautioned, however, that persistently firm coking coal and coke prices could place additional pressure on steelmakers’ profit margins.
Coking coal forecasts revised upward
Macquarie also increased its coking coal price forecasts following the fatal mine accident in China’s Shanxi province in May. The bank raised its 2026 hard coking coal price forecast by three percent and its semi-soft coking coal forecast by one percent.
According to the report, safety inspections introduced after the accident have reduced China’s domestic coal production by around nine percent year on year and contributed to a recovery in import demand.
