Iron Ore Retreats Slightly While Maintaining Key Technical Support

Iron ore prices edged lower Friday morning, with the benchmark 62% Fe CFR China index trading at $100.75, down $0.30 (-0.30%) from Thursday’s close.

The decline comes despite positive momentum earlier this week that propelled prices above the psychologically important $100 barrier. The Dalian Commodity Exchange saw the September iron ore contract fall 0.75% to 729.5 Yuan ($101.3).

Meanwhile, Singapore’s June benchmark dropped 0.68% to $100.5. Technical indicators present a mixed outlook for the key steelmaking ingredient. The price currently sits above both the 50-day moving average ($100.53) and 100-day moving average ($99.84).

This positioning suggests bullish short-term momentum despite today’s pullback. The 200-day moving average ($101.45) continues to act as overhead resistance, limiting further advances.

Bollinger Bands show moderate volatility with prices testing the upper band, indicating potential overbought conditions. Supply constraints have provided crucial support for iron ore prices throughout early 2025.

Cyclonic weather previously disrupted Australian shipments, while Rio Tinto faces quality challenges with its flagship Pilbara Blend fines. The company must downgrade its ore from 61.6% Fe to 60.8% Fe through September 2025, forcing steelmakers to purchase additional material.

Demand indicators show some softening in the immediate term. Mysteel’s survey revealed average daily hot metal production fell 0.4% week-over-week to approximately 2.45 million tonnes as of May 15.

This decline contributed to today’s price weakness despite the broader positive momentum. Analysts expect production to remain stable through June as steel mill profit margins encourage continued high operating rates.

The recent US-China trade truce has dramatically improved market sentiment for industrial commodities. Both nations agreed to reduce their punitive tariffs to more moderate levels of 30% and 10% respectively for a 90-day period.

This de-escalation has driven major mining stocks higher, with Rio Tinto gaining 14.3% since the announcement. Chinese economic indicators reveal resilience despite property sector headwinds.

The steel industry’s Purchasing Managers Index remained expansionary at 50.3 in April. Fixed asset investment growth increased to 4.2% in March from 3.2% in December 2024.

Heavy industry sectors like railways and shipbuilding saw investment surge 20% year-over-year in Q1 2025. Market analysts remain divided on iron ore’s trajectory.

Trading Economics forecasts prices falling to $96.63 by quarter-end, while ANZ Research maintains a more bullish $100/t target. The critical $95.40 support level has repeatedly held firm during multiple tests throughout 2025, establishing a potential floor.

Longer-term concerns persist about supply increases, particularly with Guinea’s Simandou project starting production in November, earlier than previously expected.

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