Iron ore prices should ease further in the coming months after the iron ore price rally started to show signs of weakening, according to Fitch Solutions. Demand from Chinese steel producers peaked in the first half of 2021 and this is coinciding with improved global supply.

The research firm has nevertheless revised upwards its 2021 iron ore price forecast from $160/tonne to $170/t, as prices rallied slightly above its expectations in H1. Beyond 2021, the firm expect iron ore prices to follow a multi-year downtrend, with prices forecast to decline to $75/t average by 2025.

As for China, “we expect the demand impact from stimulus to start wearing off from late 2021 as construction projects reach completion and the pipeline of further new projects lessens, with the Chinese Government focusing on tightening credit lines,” Fitch Solutions says in a note seen by Kallanish. “Additionally, the government is on a steel production limiting drive as an avenue to decarbonise the economy, where the aim for 2021 steel production is to total around 2020 levels.”