Iron Ore Prices Sink as China’s Strategic Shift and Technical Breakdown Accelerate Losses

Iron ore prices for 62% Fe fines delivered to China fell sharply in the last 24 hours, closing at $93.15 per ton on July 1, 2025, according to official futures data.

This drop marks the lowest point since early in the year and follows a pronounced sell-off that began in yesterday’s late session and intensified overnight.

The move underscores the evolving strategies of Chinese steel mills and the impact of a weakening technical structure. Charts from the SGX TSI Iron Ore CFR China (62% Fe Fines) Index Futures show a decisive break below key support.

The daily and 4-hour charts both display large red candles, signaling strong selling momentum. The 4-hour chart’s Relative Strength Index (RSI) collapsed to 23, deep in oversold territory, while the daily RSI dropped to 34, approaching similar levels.

The Moving Average Convergence Divergence (MACD) indicator on both timeframes shows a widening bearish divergence, with the MACD line well below the signal line and histogram bars extending further negative.

Prices now trade below all major moving averages, including the 50, 100, and 200-day lines, reinforcing the downtrend. Bollinger Bands on both charts show price action breaking below the lower band, confirming heightened volatility and downward pressure.

China’s Iron Ore Imports Decline Amid Construction Slowdown

Fundamental factors reinforce the technical weakness. China’s iron ore imports fell 4.9% in May compared to April, with total volumes at 98.13 million metric tons.

This decline aligns with a broader trend: for the first five months of 2025, imports dropped 5.2% year-on-year. Mills have shifted to more sophisticated procurement strategies, timing purchases to seasonal demand and leveraging price fluctuations.

The summer construction slowdown, rising use of scrap steel, and increased domestic ore utilization all contribute to subdued demand for seaborne iron ore. Port inventories have also declined, but not enough to offset reduced buying.

Macroeconomic signals remain cautious. China’s infrastructure spending rose 3.2% year-on-year in the second quarter, but the real estate sector continues to contract, with new construction starts down 2.8% from a year earlier.

The manufacturing Purchasing Managers’ Index (PMI) hovers below the expansion threshold at 49.8, signaling sluggish industrial activity.

Steel mills face margin pressures from higher energy costs and stricter environmental rules, prompting further caution in raw material procurement.

Market participants note that high-grade ore retains some premium, but medium grades like 62% Fe face the brunt of demand cuts. Open interest in iron ore futures remains steady, suggesting no panic liquidation, but new buying interest is limited.

Volume spikes during the sell-off confirm that the move is driven by active repositioning rather than passive flows or ETF rebalancing. This convergence of technical breakdown and fundamental weakness leaves iron ore prices vulnerable to further declines.

Unless demand revives or technical indicators show reversal patterns, the market may continue to test lower support levels in the weeks ahead.

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