Fitch raised iron ore price forecast for 2023-2026

The international rating agency Fitch Ratings has raised its price forecast for iron ore and coking coal for 2023-2026.

The price of iron ore is expected to reach $118 per tonne this year (up from $110 per tonne in the previous forecast).

In 2024, the price for this raw material is forecast at $95/t, in 2025 – $80/t, in 2026 – $75/t. The previous forecast was $85/t, $75/t and $70/t, respectively.

The increase in short-term iron ore assumptions, Fitch said, reflects prices since the beginning of this year and the expected replenishment of reserves in 2024 due to low levels.

«We do not expect plans to coordinate all iron ore purchases in China, which would offset some price growth, to be implemented in the short term due to the large number of brokers,» the agency noted.

The medium-term outlook reflects the longer time needed for additional capacity to come on line, which means there will be no oversupply until then.

As for coking coal, Fitch expects its price to reach $290/t in 2023 and $210/t in 2024. The previous forecast was $250/t and $190/t, respectively. Expectations for 2025 and 2026 remained unchanged at $180/t and $170/t. The short-term forecast reflects an increase in the cost of coking coal production and disruptions in its supply by sea due to unfavorable weather conditions. At the same time, demand from the steel industry, especially in China, is likely to be resilient.

As GMK Center reported earlier, at the end of November, analysts predicted that the price of seaborne iron ore could rise to $150/t in the first half of 2024. They raised their estimates amid expectations of increased demand in China following measures to revive the country’s economy. China buys more than two-thirds of the world’s iron ore, and its demand dictates prices and production plans of leading mining companies.