Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
UBS Raises Long-Term Iron Ore Forecast to US$93 as Demand Outlook Strengthens
Highlights:
UBS Turns More Constructive on Long-Term Iron Ore
The long-term outlook for iron ore has received a notable upgrade after UBS raised its price forecast to US$93 per tonne from US$85 per tonne. The revised estimate, outlined in a 29 September 2026 UBS note and reported on 30 September, sits roughly 12% above the market consensus of US$83 per tonne.
The change comes despite expectations that iron ore could remain under pressure in the nearer term as additional supply enters the seaborne market. Guinea’s Simandou development is already ramping up faster than some earlier expectations, creating a potential headwind for prices before the market begins tightening later in the decade.
Benchmark iron ore was recently trading below US$100 per tonne, highlighting the gap between current market conditions and UBS’s longer-term assessment.
Why UBS Sees Stronger Demand Ahead
A central part of UBS’s outlook is the changing composition of Chinese steel consumption. China’s prolonged property downturn has reduced construction-related steel demand, but manufacturing and exports have helped cushion the decline.
According to UBS, Chinese steel demand has fallen substantially from its 2020 peak, while steel production has declined by a much smaller margin. The bank attributes part of that resilience to stronger demand from manufacturing industries and steel embodied in exports such as vehicles, machinery and ships.
Beyond China, UBS expects developing economies to become increasingly important sources of steel consumption. Its analysis highlights India, Indonesia, Vietnam, Brazil and Saudi Arabia among markets where industrialisation and infrastructure development could support demand through the next decade.
UBS expects steel production across its selected group of developing economies to rise from 434 million tonnes to 640 million tonnes by 2035. India could become particularly significant, with the bank forecasting its seaborne iron ore imports to increase sharply over the period. Market Index
Supply Growth May Be Less Comfortable Than It Appears
UBS also questions whether headline production volumes adequately capture future supply conditions. Its analysis focuses on declining ore grades, depletion of mature deposits and the significant capital required to replace ageing mines.
Key long-term supply considerations include:
UBS estimates the industry could spend considerably less on new supply between 2027 and 2035 than during the preceding nine years. While it still anticipates a surplus during Simandou’s ramp-up, the bank expects market conditions to tighten after the project reaches full production around 2029.
What the Upgrade Means for ASX Iron Ore Miners
The higher long-term assumption could improve the valuation backdrop for iron ore producers, including BHP Group (ASX: BHP), Rio Tinto (ASX: RIO), Fortescue Ltd (ASX: FMG) and Mineral Resources Ltd (ASX: MIN). However, UBS’s changes to individual price targets were mixed, reflecting differences in ore quality, costs, capital expenditure and commodity exposure.
Outlook: Iron Ore Faces a Two-Speed Future
Iron ore’s outlook remains divided between potential near-term supply pressure and a more supportive structural picture. Simandou’s expansion, elevated inventories and softer Chinese construction demand remain important risks. S&P Global has also highlighted rising seaborne supply and weaker Chinese steel demand as downside factors.
Over the longer term, however, manufacturing-led Chinese steel consumption, industrialisation across developing economies, declining ore grades and mine depletion could provide firmer price support. The key question for the next several years will be whether new supply can expand quickly enough to keep pace with this evolving demand base.
Note- All data presented is based on information available at the time of writing.
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