Iron Ore Holds Above $100 Despite Morning Pullback as US-China Tensions Ease

Iron ore prices showed resilience this morning despite a slight pullback, with the benchmark 62% Fe CFR China index trading at $101.30.

The price dipped 0.30 points (0.30%) from yesterday’s close but maintains its position above the psychological $100 barrier. Traders view this consolidation as constructive following yesterday’s significant 1.25% gain that pushed prices through key resistance.

The recent price action represents a notable recovery from early May weakness, when spot quotations fell to $97.76/t. Market participants now maintain a generally positive outlook for iron ore staying above $100 throughout May.

Physical market activity shows selective buying rather than aggressive restocking, with transactions including 90,000 tonnes of Newman Fines at $96.30/t and 170,000 tonnes of PB Fines at $98.05/t.

Chinese steel mills have reduced their inventories to approximately 28 days of consumption, down from 35 days in early March. This inventory drawdown suggests mills are adopting just-in-time purchasing strategies rather than maintaining large stockpiles.

Port inventories at Chinese ports remain elevated at 138 million metric tons, still above the critical 135 million ton threshold. Technical indicators reveal iron ore‘s improved positioning on the charts.

The price has established itself above the 50-day moving average, creating a positive momentum signal. The 100-day moving average now acts as the next resistance level traders will watch closely.

Bollinger Bands show moderate volatility with prices testing the upper band. Key support exists at $95.40, which has held during recent tests, while resistance stands at $104.20.

This resistance level corresponds to the 38.2% Fibonacci retracement of the recent downtrend. The current price action places iron ore in a consolidation phase between these technical boundaries.

Easing trade tensions between the United States and China provide fundamental support for industrial metals. Both countries announced progress in trade talks with statements suggesting willingness to move forward, reducing economic disruption fears.

This diplomatic improvement has lifted sentiment across metals markets. China’s strategic monetary policy moves further bolster the market.

A substantial 50 basis-point cut to the reserve requirement ratio has released approximately CNY 1 trillion ($138 billion) of liquidity into China‘s financial system.

Beijing has also implemented reductions in benchmark interest rates and housing provident fund loan rates targeting the struggling property sector. The broader commodities complex shows mixed performance today.

Silver fell 1.32% to $31.79 per ounce, while gold dropped 1.43% to $3,140.51. Steel bucked the trend with a 1.55% gain to 3,137.00, potentially signaling improved demand prospects.

Analysts remain divided on medium-term prospects. Trading Economics projects iron ore falling to $96.63 by quarter-end, suggesting potential downside from current levels.

Market stability now depends on whether China’s monetary stimulus effectively generates steel demand growth against looming supply increases.

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