Iron Ore Holds at $98 as Chinese Mills Shift to Just-in-Time Buying

The SGX TSI Iron Ore CFR China (62% Fe Fines) Index traded at $98.35 per metric ton on Friday morning, May 9, 2025. This price represents a slight decline of 0.25% from yesterday’s close.

Traders continue testing support levels below the psychologically important $100 threshold after a week of consolidation. A strategic shift has emerged among Chinese steel producers in recent weeks.

Mills now purchase iron ore on a just-in-time basis rather than building large stockpiles. Current mill inventories average just 28 days of consumption, compared to 35 days in early March.

This cautious approach stems from uncertainty surrounding future steel demand amid China’s ongoing property market troubles. Market analysts describe the current conditions as “classic late-cycle behavior” in the iron ore market.

“Mills have completed their restocking activities and entered a more price-sensitive phase,” noted a veteran commodities trader. “They now purchase only what they immediately need rather than building safety stocks.”

Technical signals suggest continued weakness ahead. The Moving Average Convergence Divergence indicator crossed below zero in April, confirming bearish signals that began forming in late March.

Key support exists at $95.40, with any breakdown potentially pushing prices toward $89.30. The Relative Strength Index continues trending lower but hasn’t reached oversold territory.

Iron Ore Outlook

Major producers maintain disciplined output despite these pressures. Australian Pilbara facilities ship approximately 16.5 million tons weekly. Brazilian exports continue at rates consistent with first-quarter averages.

Port inventories in China currently stand at 138 million metric tons, showing only a modest 1.4% weekly decline. China’s struggling real estate sector casts a long shadow over iron ore demand.

Recent data shows property investment has fallen 9.8% compared to last year. Sales declined 5.1%, while new construction starts collapsed by 29.6%. This construction slowdown directly impacts steel consumption and iron ore requirements.

Steel production facilities operate at 82.3% of capacity across China. This rate sustains current output levels but discourages aggressive raw material purchasing. The balanced operation explains the market’s recent price stability.

Regional disparities create interesting market dynamics within China. Eastern provinces report tighter inventories due to ongoing infrastructure projects. Meanwhile, southern regions face an estimated 3.2 million-ton surplus, creating notable price differences between regions.

Market forecasters offer divergent views on future prices. Trading Economics expects a decline to $96.22 per ton by June. UBS projects a more stable $100 average for 2025. ING analysts predict continued pressure with a yearly average of $95 per ton.

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