Iron Ore Slips as Supply Rises and Chinese Demand Fails to Impress

Singapore’s SGX TSI Iron Ore 62% Fe, CFR China Index Futures traded at $95.35 per ton this morning, reflecting a 0.57% drop over the past 24 hours.

The price action comes as official data and market charts indicate the iron ore market remains pressured by a combination of rising seaborne supply and lackluster Chinese demand.

Shipments from Australia and Brazil reached 29.19 million tons last week, the highest since December, according to Mysteel. This increase in supply coincides with Chinese steel mills ramping up imports due to competitive pricing and miners pushing to meet quarterly targets.

However, the demand side shows little enthusiasm. Chinese steel production remains stable, with daily hot metal output at 2.42 million tons, up 2.6% year-on-year, but property sector weakness continues to weigh on overall consumption.

Market participants note that trading volumes are steady but not robust. Open interest on SGX stands at 305,890 contracts, with a slight decline suggesting traders are closing positions and the trend is weakening.

The technical picture, based on daily and four-hour charts, confirms the bearish bias. The price remains below all major moving averages, including the 50, 100, and 200-day lines, which cluster between $95.73 and $101.81.

The RSI on the daily chart sits at 36.23, indicating oversold conditions, while the four-hour chart shows a slightly higher RSI of 41.42, still well below neutral.

The MACD on both timeframes remains negative, with the daily reading at -1.14 and the four-hour at -0.14, both signaling persistent downward momentum.

Bollinger Bands on the daily chart have narrowed, reflecting reduced volatility, but the price continues to hug the lower band, a classic sign of sustained selling pressure.

Support levels are visible at $95.12 and $93.73, while resistance stands at $95.65 and $96.53. The market’s failure to break above these resistance levels over the last day underscores the lack of bullish conviction.

Fundamentals reinforce the technical story. Chinese port inventories remain elevated at 138 million tons, well above the panic threshold of 135 million. Mills have shifted to just-in-time purchasing, reducing inventory days and further dampening spot market urgency.

Recent spot trades, such as PB fines at $98.05 per ton, highlight the narrow price range and subdued appetite. Meanwhile, the pellet feed premium has faded as demand for higher-grade ores weakens.

Macroeconomic data from China continues to disappoint, with weak May figures prompting traders to lower bids and miners to hold out for a rebound.

Hopes for improved US-China trade relations have provided some support, but not enough to reverse the prevailing trend. Unless a clear catalyst emerges, iron ore prices appear set to remain under pressure, with the risk of further declines if support at $94.75 fails.

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