The iron ore price ticked up 1.2% over the weekend to trade for US$103.40 per tonne.
That looks to be helping support BHP Group Ltd (ASX: BHP) shares today, with the S&P/ASX 200 Index (ASX: XJO) mining stock up 1.2% at $39.11.
Shares in rival miners focused on digging up the steel-making metal are also catching tailwinds, with the Fortescue Ltd (ASX: FMG) share price up 3.0%, and Rio Tinto Ltd (ASX: RIO) shares up 2.0%.
Having traded below US$100 per tonne for several weeks in January, the iron ore price has defied a raft of bearish forecasts to remain above that psychologically key level for the past two months. Iron ore topped US$107 per tonne in the final days of February.
The latest boost looks to have come from China, with the Chinese government flagging new economic stimulus measures to lift domestic consumption and incomes. Traders appear to expect this could offer tailwinds to the steel industry as well.
Now, if you're buying BHP shares, you're likely more interested in the outlook for the industrial metal than where it's been.
After all, BHP produced 131 million tonnes of iron ore in the first half of fiscal year 2025 and reported underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$7.2 billion from its iron ore sales.
What next for the iron ore price?
According to Goldman Sachs, Fortescue, Rio Tinto, and BHP shares will all have to contend with a lower iron ore price in the second half of 2025.
As for the remainder of the March quarter, Goldman's Aurelia Waltham said (quoted by The Australian Financial Review), "It is too early for prices to break below US$100 a tonne, due to a temporary tightening of fundamentals."
But as the year progresses, Goldman forecasts that we'll see the price drop by more than 15% from current levels.
"We see the big hit to iron ore prices coming towards the end of the year, with the price averaging about US$85 a tonne by the fourth quarter, driven by lower Chinese steel production," Waltham said.
In what could pressure the BHP share price and the dividends the ASX 200 miner pays, Goldman believes the industrial metal could "temporarily" dip below US$80 a tonne. Though that's not the broker's base case.
According to Waltham:
Our current base case is that Chinese steel production cuts are at the lower end of the 20-50 million tonnes range, resulting in a 2% year-over-year decline in Chinese iron ore consumption this year. We expect Chinese iron ore port stocks to increase by 27 million tonnes in the fourth quarter.
So what can BHP shareholders expect from the iron ore price in 2026?
"As a result of the expected 35 million tonnes build in port stocks and a lower starting point for prices at the beginning of the year, we revise down our 2026 average price forecast to $US85/tonne (previously $US90/tonne)," Waltham said.
She noted that any significant supply disruptions, or Chinese steel production exceeding expectations, could skew the price outlook "to the upside".
