Iron Ore Tests Support at $104 as China’s Steel Demand Signals Turn Mixed

Trading Economics data confirms iron ore futures closed at $104.49 per metric ton on September 8, 2025, maintaining a narrow trading range as Chinese steel mills navigate production uncertainties.

The benchmark TSI Iron Ore 62% Fe CFR China index shows limited movement after recent gains, while domestic Chinese futures on the Dalian Commodity Exchange fell 0.38% to 786.50 yuan per ton.

Technical analysis reveals iron ore prices remain trapped between key support at $103.50 and resistance near $105.50. The daily chart shows price action consolidating above the 20-period moving average, suggesting near-term bullish momentum remains intact.

However, the Relative Strength Index sits at neutral levels around 58, indicating neither overbought nor oversold conditions. The Global Liquidity Index NDQ, represented by the yellow line on trading charts, shows continued expansion that typically supports commodity prices.

This liquidity backdrop provides underlying support for risk assets, though iron ore faces sector-specific headwinds that limit upside potential.

China’s steel production dynamics present conflicting signals for iron ore demand. Official data from the National Bureau of Statistics shows crude steel output declined 3.1% year-over-year through July 2025 to 594.47 million tons.

Nevertheless, hot metal production, a direct indicator of iron ore consumption, averaged 2.4 million tons daily through August, maintaining levels well above historical norms.

Port inventory data from Mysteel indicates Chinese iron ore stockpiles reached 144.26 million tons across 47 major ports, representing a 377,000-ton weekly increase.

This inventory build suggests adequate supply availability despite recent production restrictions around Beijing’s military parade commemorating World War II’s end.

Steel mills face margin pressure as finished steel prices struggle to keep pace with raw material costs. Industry consultancy Mysteel reports that approximately 69% of Chinese steel producers remain profitable, though margins have compressed from earlier 2025 levels.

This profit squeeze influences purchasing decisions and inventory management strategies. The four-hour chart reveals consolidation patterns with declining volume, typical of markets awaiting direction.

Support levels hold firm at $103.50, while resistance near $105.50 has capped recent advance attempts. Moving average convergence divergence indicators show neutral momentum, neither strongly bullish nor bearish.

Export dynamics continue supporting Chinese steel production despite domestic weakness. China’s steel exports reached record levels in 2025, rising 22.7% year-over-year as producers seek overseas markets.

This export surge maintains steel production above domestic consumption levels, supporting iron ore demand even amid property sector struggles.

Supply-side developments include rising Brazilian exports, which reached record monthly levels exceeding 41 million tons. Australian shipments remain steady despite weather-related disruptions earlier this year.

The anticipated Simandou project in Guinea approaches commissioning, potentially adding significant supply capacity by late 2025.

Goldman Sachs recently raised its fourth-quarter 2025 iron ore forecast to $95 per ton while maintaining longer-term bearish projections.

The investment bank expects structural oversupply conditions to develop as new capacity additions outpace demand growth, particularly given China’s decarbonization objectives.

Market participants monitor production restrictions in key steel-producing regions, including Tangshan where mills faced temporary output cuts.

These restrictions typically support steel margins by reducing supply, creating temporary demand boosts for iron ore despite lower overall production volumes.

The broader commodities complex shows mixed performance, with crude oil declining on demand concerns while precious metals advance on monetary policy expectations.

Iron ore’s correlation with industrial metals remains strong, though China-specific factors increasingly drive price action independently of broader commodity trends.

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