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Predictions for iron ore prices in 2025 remain mostly mixed, but early signs in the new year indicate an upward trend, at least in Asian markets. According to a report by Reuters, one positive indication was a northward trend of iron ore futures prices on China’s Dalian Commodity Exchange (DCE) last Monday.
The DCE’s most-traded May iron ore contract ended that session 1.06% higher at approximately US $111.54 (810.5 yuan) a metric ton. Meanwhile, the futures deal has already climbed over 4%. From the looks of it, this contract will see a monthly gain. In addition, the standard February iron ore on the Singapore Exchange also traded higher. This has led many traders to predict iron ore prices might rise further this year.
China Enters the New Year Facing Significant Hurdles
Following comments made by President Donald Trump amid the ongoing trade discussions between the U.S. and China, the fear of potential tariffs has come down a notch. As a result, there is a bit of optimism to the outlook for trade relations between the two countries.
Meanwhile, the construction of new infrastructure and new steel plants across China continues uninterrupted. In January, the China Iron and Steel Association registered a 0.3% increase in the daily output of crude steel from the top companies.
However, China’s manufacturing sector continues to experience significant pain, having just reported its worst performance since August. Prices could increase even more if the market doesn’t counter the negative turn after the Chinese holidays.
Because of the Chinese New Year, financial markets there will be shut from January 28 to February 4. Analysts are now hoping that the new year will usher in economic reforms and an increase in infrastructure projects that will lead to more steel buying. This, in turn, would be
Iron Ore Price Remains Low
The worldwide iron ore price is currently hovering around the US $100 per ton mark, but the bears in the market see it falling further in the next few months.
On the other hand, the bulls predict that several factors could boost China’s economic performance beyond analysts’ expectations this year, which would support stronger demand for iron ore. Chief among these factors are the somewhat favorable comments made by the U.S. President and his shifting stance on tariffs.
History demonstrates that iron ore prices remain heavily tied to China’s domestic consumption. The past track record shows that when the Chinese economy lags, Beijing will try to prop up the economy one way or another. This i what many sector analysts expect to happen in 2025, which could be good news for iron ore.
Speculative Trading of Iron Ore Surges
The iron ore futures market has been significant in terms of price movement changes throughout January 2025, as speculative actions by traders and investors have added additional volatility to the market. Meanwhile, rising anticipation about supply disruptions and fluctuations in demand has further raised trading volumes in the futures market.
Moreover, speculative trading of iron ore futures has accelerated this month due to market participants trying to exploit price variations. Hedge funds, institutional investors and other individual traders are actively engaged in speculative trading, adding to the general volatility experienced in the pricing of iron ores. The latter then affects futures prices, making the whole circuit between the spot and futures market.
Could Beijing Still Reinvigorate the Chinese Economy?
Last year, iron ore prices remained under constant pressure because of the dampened nature of China’s economy. One estimate pegged the drop at 25%. In 2025, the same economic conditions, including the poor offtake of real estate and the slowing down of infrastructure projects, seem poised to continue. However, experts are hoping for at least some stimuli from the government to change this.
Steel prices and downstream profit margins are clear indicators of high demand for high-grade iron ore. According to a steelmaker Shanxi as reported in this analysis, the first quarter would still be weak on high-grade fines, which may indicate low margins in steelmaking. Also, why buy price points for every metal type when you only need steel?
