UBS has raised its long-term iron ore price forecast to $93 a tonne from $85, about 12% above the market consensus. The bank argues investors are underestimating how tight supply gets once Guinea's giant Simandou mine is fully running.
At a glance
- UBS's new long-term iron ore forecast of $93 a tonne sits well above the roughly $83 consensus.
- The bank expects about 800 million tonnes of existing supply to be lost to depletion by 2035.
- It raised its price targets for BHP and Rio Tinto but cut Fortescue's to A$16.50 from A$18.35.
Background
Iron ore is the main raw material for steel, and most of it is shipped from Australia and Brazil to China. Simandou in Guinea is the biggest new source of supply in years, and many analysts expect it to push prices down. The cost curve ranks mines from cheapest to most expensive; prices tend to find a floor where the costliest mines start losing money.
What UBS changed
UBS has lifted its long-term iron ore forecast to $93 a tonne from $85. That puts it about 12% above the consensus of roughly $83. The bank says the market is underestimating how tight iron ore will become once Simandou is fully ramped up.
The call is a shift in emphasis. In August, UBS said it expected benchmark prices to drift lower through the second half of this year and into 2027 and 2028, as Simandou's output grew.
Why it thinks supply gets tighter
Simandou is designed to produce 120 million tonnes a year and should reach that level around 2029. UBS expects about 800 million tonnes of existing supply to be lost to mine depletion by 2035, far more than Simandou adds. Falling ore grades and weak investment in new mines add to the squeeze.
Costs are also rising. Spot prices around $95 a tonne sit near the 93rd percentile of the cost curve, UBS says, and persistent cost inflation keeps lifting that curve. On demand, it expects the Global South's roughly 3 billion people and China's pivot to manufacturing and exports to more than offset China's construction slowdown.
What it means for miners
UBS raised its price target for BHP to A$61 from A$59 and for Rio Tinto to A$178 from A$177. It cut Fortescue to A$16.50 from A$18.35 and Mineral Resources to A$74 from A$76. Vale's target fell to $15 from $16.50.
The split reflects which miners are most exposed to iron ore alone. For steelmakers that import ore, including in India, a higher long-term price floor would mean higher raw material costs later in the decade.
Our read
Outlook: bullish. UBS sees a higher long-term floor for iron ore as depletion outpaces new supply. The view is long-dated, and near-term prices could still ease while Simandou ramps up.
What to watch
- Simandou's shipment ramp-up and whether it reaches its 120 million tonne capacity by 2029.
- Where iron ore trades relative to the $92 to $106 range UBS highlights on the cost curve.
- Chinese steel output, which still drives most seaborne ore demand.
For information only, not investment advice.
Iron price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2026-08-06: UBS says it expects iron ore prices to trend lower into 2027 and 2028 as Simandou ramps up.
- 2026-09-29: UBS raises its long-term iron ore forecast to $93 a tonne from $85.
Demand Drivers
UBS expects demand from the Global South and China's manufacturing exports to offset weaker Chinese construction.
Supply Drivers
About 800 million tonnes of depletion by 2035 outweighs Simandou's 120 million tonnes a year, in UBS's view.
Mining Production
Falling ore grades and weak capital spending limit how quickly miners can replace depleted output.
What could lift prices
- Depletion at existing mines could remove far more supply than Simandou adds by 2035.
- Rising costs keep lifting the price level at which high-cost mines lose money.
What could weigh on prices
- Simandou's ramp-up adds large new supply over the next few years.
- UBS itself expected prices to drift lower into 2027 and 2028 as recently as August.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Australia | High | BHP, Rio Tinto and Fortescue depend heavily on Pilbara iron ore prices. |
| Guinea | Medium | Simandou's ramp-up is the central supply question in the forecast. |
| India | Low | Indian steelmakers that import ore would face higher long-term input costs. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Iron Ore Mining | Positive | A higher long-term price assumption lifts the value of iron ore mines. |
| Steelmaking | Negative | Steelmakers would pay more for their main raw material over time. |
Who gains, who loses
- BHP and Rio Tinto: UBS raised both companies' price targets after lifting its iron ore forecast.
- Fortescue: UBS cut its target to A$16.50 from A$18.35 despite the higher ore forecast.
Other ways this could play out
- If Simandou ramps up faster than expected, prices could fall well below $93 before tightening.
- If depletion and cost inflation play out as UBS expects, the long-term floor could settle above consensus.
Price risks
- A sharper-than-expected fall in Chinese steel output would weaken the bullish case.
- Faster growth in new supply beyond Simandou would undercut the depletion argument.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
Australia
India