Iron Ore Below 2019 Levels: The Simandou Effect
In a year of record metal prices, iron ore is the great exception. Prices around $92 per tonne are sliding toward — and forecast to fall below — pre-2019 levels through 2026–27. The reason has a name: Simandou.
The largest new supply in a generation
Guinea's Simandou project — the biggest untapped high-grade iron ore deposit in the world — is finally shipping. Its low-cost, high-grade output lands in a market where Chinese steel demand growth has plateaued and other major producers are also expanding. The World Bank expects iron ore supply growth to outpace demand for at least two years.
Consequences down the steel chain
- Carbon steel prices follow ore. US hot-rolled coil around $785 per short ton faces persistent downward pressure as input costs fall and mills compete for orders.
- Mill margins compress unevenly. Producers with captive ore lose their advantage; converters buying spot ore gain one.
- Contract structures matter more than price calls. Buyers locked into long fixed-price steel agreements struck at 2024–25 levels are now overpaying; those on index-linked deals capture the decline automatically.
The procurement angle
Falling-input markets reward short positions: spot buying, one-to-three-month cover, and index-linked contracts that pass ore declines through to finished steel prices. The opposite logic applies to stainless steel, which is bottoming after its 2025 slide — a reminder that "steel" is not one market but several, each with its own supply story.
Primary sources: World Bank Commodity Markets Outlook, Deloitte 2026 Mining & Metals Outlook, McKinsey commodity trading research, and current exchange benchmark levels.