With iron ore having outperformed bearish expectations in H2 2025, Deutsche Bank Research analysts expect prices to remain supported in the first half of 2026, forecasting averages of US$106/t in Q1 and US$102/t for 2026 as a whole.
When it comes to supply and demand, the report notes a “balanced market, with a bias towards surplus in H2; iron ore port inventories climbed through most of 2025 and currently sit at the highest level since 2022”. The state of the Chinese property market has a direct bearing on iron ore/steel demand and prices, and analysts expect domestic steel demand to continue to contract due to ongoing property market weakness.
Potential steel production regulation in China (management of overcapacity, export quotas and environmental impacts3) remains a theme, but the analysts point out that the same was noted a year ago, “yet Chinese exports reached record levels in 2025”.
All eyes will be on China’s policy measures for steel and iron ore – particularly for those supporting growth through further infrastructure or property investment, given construction uses huge amounts of iron and steel (iron ore being the core metal for both cast iron and steel – an alloy of iron, manganese chromium and nickel).
“Capacity optimisation and elevation of steel products to a higher value have been key themes for the steel industry in China”
According to Deutsche Bank’s Kok-Leong Lee, Head of Trade Finance and Lending Greater China, “Capacity optimisation and elevation of steel products to a higher value have been key themes for the steel industry in China”.
He explains how the resilience of China’s manufacturing sector today, particularly in new sectors such as electric vehicles and renewable energy (particularly wind and solar) have provided “some level of support and diversification to the demand for steel products”. He concludes, “However, more is still expected in terms of policy measures considering the significance of the construction sector and infrastructure investment.”