Iron Ore Prices Edge Higher as China Demand Holds Firm Amid Supply Constraints

Iron ore futures for 62% Fe fines, delivered to China, edged higher today, reaching $100.05 per tonne on the Singapore Exchange (SGX).

This modest gain continues the upward trend observed in recent days, reflecting sustained demand from Chinese steel mills amid tightening global supplies.

Over the past 24 hours, iron ore prices maintained momentum, partly driven by decreased shipments from major producers like Australia and Brazil.

Lower shipment volumes have tightened supply at Chinese ports, where inventories remain relatively low, between 125 and 146 million tonnes. China’s steel output remains robust, supporting the ore’s demand.

Despite challenges in the property sector, steel production levels are high, with mills actively replenishing stockpiles. June’s hot-metal production reached approximately 94.5 million tonnes, underscoring persistent raw material demand.

The latest results from Australian miner Fortescue further buoyed market sentiment. Fortescue announced record quarterly iron ore shipments of 55.2 million tonnes and notably low production costs, the lowest since 2020.

Such strong performance from major suppliers often helps stabilize market confidence by alleviating fears of long-term shortages. Technical indicators reinforce the cautiously optimistic market sentiment.

On the daily chart, prices recently broke past significant resistance around the $99 mark, supported by the 200-day moving average.

The Moving Average Convergence Divergence (MACD) signals bullish momentum, while the Relative Strength Index (RSI), near 70, suggests the market is approaching an overbought condition, warranting caution.

Similarly, the four-hour chart confirms a stable short-term uptrend. Prices trade comfortably above key moving averages, including the 50-hour exponential moving average (EMA).

The MACD remains positive, albeit with diminishing momentum, and RSI hovers around 66, signaling sustained but tempered strength. Global liquidity, represented by the Global Liquidity Index NDQ, remains elevated.

This suggests ample capital is available to support commodity investments. This liquidity backdrop is generally favorable, aiding commodities such as iron ore, especially during periods of tighter supply.

Looking ahead, market participants will closely watch for updates on Chinese industrial data and any further changes in iron ore shipment patterns.

A sustained breakout above the $101 resistance could open doors to higher prices. Conversely, failure to consolidate current gains might signal a short-term correction towards recent support around $98.

Overall, the iron ore market currently balances robust Chinese demand against constrained supply dynamics, maintaining a cautiously optimistic outlook for traders and industry stakeholders alike.

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