en.Wedoany.com Reported - Australia's Macquarie Group believes that the resilience of iron ore prices in the first half of the year was primarily supported by high freight costs and rising production costs, rather than improvements in supply-demand fundamentals. The bank expects market attention to shift back to underlying market factors in the coming months.
Macquarie Group maintains its 2026 average iron ore price forecast at $103 per ton, with a third-quarter forecast of $100 per ton. Analysts note that high transportation costs have driven up production costs and formed a price floor of approximately $85 per ton.
As market focus returns to fundamentals, supply growth from Guinea's giant Simandou project could add further pressure to the market. Analysts led by Florence Sang stated that high Capesize vessel freight rates in the first half of the year supported prices, benefiting from record bauxite exports from Guinea and increased shipping distances on trade routes.
Over the past week, iron ore prices have fallen, breaking below the psychological threshold of $100 per ton for the first time since March. High supply levels and substantial raw material inventories are weighing on the market.
Meanwhile, China's steel demand remains more resilient than previously expected, with pig iron production staying near seasonal highs. However, analysts warn that relatively high coking coal and coke prices could pose risks to the metallurgical industry due to narrowing steel mill margins.
In the coking coal market, Macquarie Group raised its price forecasts following a fatal accident at a coal mine in China's Shanxi province in May. The 2026 forecast for premium hard coking coal was raised by 3%, and semi-soft coking coal by 1%.
After the accident, Chinese authorities conducted large-scale safety inspections, leading to a year-on-year decline of approximately 9% in domestic coal production. The bank noted that this has driven a recovery in demand for imported coking coal.
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