Goldman Sachs raised its Q4 iron ore forecast to $95, but the rise is difficult to continue, and the “fog” of demand has not dissipated

The Zhitong Finance App learned that recently, Goldman Sachs raised its iron ore price forecast. Although the market's doubts about actual demand have not dissipated, iron ore futures prices have continued to rise for two consecutive days. However, Goldman Sachs also expects iron ore prices to fall back to $80 per ton by the end of 2026. Short-term price increases are not indicative of long-term strength; this rise is more driven by price expectations and short-term sentiment.

Currently, iron ore prices are on a short-term upward trend: the price of the most active iron ore futures contract on the Dalian Commodity Exchange hit 777.5 yuan (about 108.70 US dollars) per ton, and the benchmark price of iron ore in Singapore also climbed slightly to 103.1 US dollars per ton. Goldman Sachs raised its fourth-quarter iron ore price target from $90 to $95 per ton, temporarily boosting investor sentiment.

However, Goldman Sachs also expects iron ore prices to fall back to $80 per ton by the end of 2026. Industry experts remain cautious about this, believing that despite the active performance of the futures market, actual demand from steel producers has not actually rebounded. Recently, steel production has declined due to the temporary environmental protection limit policy in the Tangshan region of China, which has also curtailed the actual consumption demand for iron ore. However, production restrictions will end after September 4, and demand for iron ore is expected to usher in a new growth momentum at that time.

What does that mean?

For the market, rising prices do not mean long-term strength. This short-term rise in iron ore prices is more driven by price expectations and short-term market sentiment, rather than a substantial increase in steel demand. Unless steel production picks up soon, the current price increase could quickly lose momentum. Although the prices of some steel products on the Shanghai Futures Exchange have risen slightly, the overall upward momentum has weakened, and the prices of related commodities such as coking coal have declined. If demand fails to rebound, investors may begin to withdraw from the market, putting pressure on iron ore prices.

Looking at it from a broader perspective: Policy trends continue to influence the global outlook. China's steel industry is a key weather vane for global commodity demand, and this temporary production restriction policy also highlights the significant impact of government intervention on the market. Currently, many mainstream banks still predict that iron ore prices will eventually return to a low level, which means that market fundamentals may once again become the core factor dominating the price trend. In the future, iron ore price trends will depend on three key factors: China's economic recovery process, changes in global construction demand, and new trends in energy and infrastructure spending.