But China’s struggles with its housing oversupply and slumping construction sector, which chews up 30 per cent of its steel demand, coupled with looming barriers to its goods entering the US market are weakening economic activity.

Analysts at UBS, led by Lachlan Shaw, said China’s efforts to stimulate its economy following Trump’s tariff blitz will only “partly offset” a slide in demand.

“Tightish fundamentals year-to-date on disrupted supply and robust demand are set to ease as tariffs reduce growth,” they said.

UBS expects iron ore surpluses to build in the second half of this year, which could drag prices per tonne down to as a low as $US88 ($138) over the next three years.

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Government figures in the latest Resources and Energy Quarterly show Australia’s iron ore exports increased 1.2 per cent year-on-year to 902 million tonnes in 2024.

“Prices are expected to ease over the outlook to 2030 due to softer global demand and rising global supply,” the quarterly report suggests.

It forecasts Australia’s iron ore earnings will decrease in real terms from $117 billion in 2024-25, to $109 billion in 2025-26, and $81 billion in 2029-30, eating into crucial government tax revenue.

BHP said its average realised price per tonne of iron ore was down 21 per cent. Iron ore is trading on global markets at about $US100 a tonne, down from a high of $US136 at the end of 2023.

The UBS analysts said they were cautious about the prospects of iron ore, metallurgical coal (used by blast furnaces to make steel) and lithium (a key component of electric vehicle batteries) where supply is set to exceed demand.

“US tariff policy has increased uncertainty, undermined confidence and is likely to reduce demand and stoke inflation, at least initially. As such, we remain cautious on the [mining] sector and prefer gold, given growth, inflation, geopolitical and economic risks,” they said.

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