Domestic price of iron and steel

IBISWorld forecasts the PPI of iron and steel to spike by 22.7% in 2025-26 to 146.6 index points. Global market prices partly determine the domestic price of iron and steel, due to the international trade of these commodities. The US-Israel conflict with Iran has stifled global fuel supply, making it tougher for miners and manufacturers. Additionally, the region has seen iron ore cargoes disrupted as Strait of Hormuz routes become untenable. With Oman and Bahrain major iron pellet producers in the region, higher-grade ores, like Australia's, have become more lucrative. Australian exporters have faced tough trading conditions too, as Cyclone Narelle closed all four Pilbara port terminals in late March. Nathan River Resources have struggled to keep up with these rising expense needs, laying off workers and lowering output to maintain viability, further shrinking iron ore supply. While the ports have reopened, these disruptions have highlighted the risks and fragility in the global ore trade, with heightened prices reflecting this supply-side crunch.

Iron and steel costs have trended down for most of the past five years on the back of global oversupply. In Australia, Rio Tinto's new Western Range mine added to the surge, as throughout 2025, iron ore purchasers had an abundance of choice. The decline also stems from several other factors, including reduced global construction activity and lower demand for iron ore and steel. The ongoing economic challenges and structural shifts in steel demand across key industrial sectors, particularly in China's property and infrastructure markets, have caused an existential threat to Australia's steel and iron producers. With heightened interest rates and inflationary pressures already weighing on the manufacturing and construction sectors, continued weaknesses in China's property sector have dampened the key nation's steel demand.

Cost pressures are limiting price competition among Australia's iron and steel smelters, as seen with Liberty Bell Bay's move into voluntary administration. The manganese alloy smelter, a key ingredient in steel, cited difficult market conditions worldwide, from demand-side issues with China and supply-side fuel and energy cost concerns, as major challenges.

Prices were lucrative early in the five year period, as supply constraints in Brazil sharply elevated iron ore prices in 2020-21. Additionally, India has emerged as a China-alternative net importer target as the country's infrastructure goals ramp up. Despite their focus on in-house production, India hasn't been able to keep up with their own demand. To accommodate their own demand, the country's steel exports have sunk to a six-year low and Australia and China have sent more steel across.

Supply chain disruptions the Russia-Ukraine and US-Israel-Iran conflicts have constrained supply over the past few years, repeatedly spiking iron and steel prices. Greater government infrastructure spending to support economic activity during the pandemic also drove up iron ore and global iron and steel prices in 2020-21. Meanwhile, scattered lockdowns in some parts of China limited manufacturing activity from late 2021-22, providing a catalyst for a deteriorating real estate industry. Demand for locally produced iron and steel products has come under pressure over the period, as local builders have faced challenging trading conditions because of inflationary pressures and costly borrowing rates. To combat cheaper imports, Australia placed a 10% tariff on Chinese steel products in early 2026, artificially keeping local prices high. These trends have offset dampening demand and temporarily heightened the domestic price growth of iron and steel. Overall, IBISWorld forecasts the PPI of iron and steel to grow at a compound annual rate of 5.0% over the five years through 2025-26.