Iron-ore prices increased strongly in the five years to 2021, but have halved since then, standing now at around US$95 per tonne. Iron-ore export values have declined accordingly since 2021.

Writing in March, the Office of the Chief Economist in Canberra expects a continuing decline in iron-ore prices and export values over the next five years. This reflects a fall in domestic steel demand in China, an increase in Chinese steel exports (around 10% of production and growing strongly), increased iron-ore production from Australia and Brazil and the start of iron-ore production in Guinea, a potentially important producer. (Note that the steel industry takes around 98% of iron-ore globally).

The Trump tariffs, introduced in early April, seem not to have affected prices much so far, not surprising as the US is only a small market for Chinese steel. However, if the tariffs lead to an economic slow-down in other countries, they will reduce global steel demand and thus iron-ore prices.

Reduced prices will be unwelcome in Australia, not just for the iron-ore industry, but also for Federal government budgets. Iron ore made up around 20% of company tax at its peak in 2021, but has fallen steadily in importance since and looks to fall further.