Iron ore prices have defied expectations in 2025, staying stubbornly above $100 a tonne.
According to UBS, this resilience owes less to roaring Chinese demand and more to deliberate production restraint from the world's biggest miners.
Beijing’s latest stimulus efforts, focused on finishing housing projects rather than starting new ones, have helped stabilise steel demand but are no repeat of the breakneck building booms of the past.
The Swiss bank expects Chinese steel production to decline modestly this year, meaning the usual demand story for iron ore remains lukewarm.
Instead, what’s propping up prices is the discipline shown by producers like Vale, Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) and BHP Group Ltd (LSE:BHP, ASX:BHP).
The top five exporters are set to ship 40 million tonnes less in 2025 than previously forecast.
UBS notes this tight supply, alongside steady demand from India and Southeast Asia, is enough to keep prices supported in the near term.
That said, the bank is sticking with a cautious medium-term view. It sees iron ore prices slipping to $90 a tonne in the second half of the year and falling further to $80 in 2026 as more supply gradually returns and Chinese demand softens further.
So while prices may not collapse tomorrow, investors eyeing iron ore should remember that gravity still applies.