Iron Ore Prices Slide to $99.20 as China’s Property Slump Stalls Demand

Iron ore’s rally has hit a wall. The critical steelmaking ingredient traded at $99.20 per tonne this week, down 0.35% as China’s property crisis and high mill inventories continue suppressing iron ore prices. According to SGX TSI data, this marks a cautious retreat from recent peaks as traders await decisive signals from Beijing.

Iron Ore Prices Reflect China’s Economic Crosswinds

Benchmark 62% Fe iron ore has swung wildly in recent months amid conflicting forces. China—consuming 70% of global seaborne supply—saw imports drop 4% year-on-year in H1 2024 (China Customs, July 2024). Yet steel production rose 1.7%, creating a push-pull dynamic. Major miners like Vale and Anglo American ramped up output, ensuring comfortable supply.

High inventories at Chinese mills now exceed 140 million tonnes (World Steel Association, June 2024), reflecting sluggish construction activity. “Property sector woes are neutralizing infrastructure-driven demand,” notes metals analyst Li Wei of Shanghai Metals Market. This imbalance caps price momentum despite marginal liquidity improvements in global markets.

Technical Indicators Signal Cautious Outlook

Daily charts reveal iron ore struggling to breach the psychological $100 resistance. Key metrics suggest turbulence:

• RSI at 62: Nearing overbought territory
• Bearish MACD divergence: Fading upward momentum
• Tightening Bollinger Bands: Volatility contraction

Four-hour charts show RSI weakening to 45, reinforcing short-term caution. “Traders are sidelined until China’s policy direction clarifies,” says ING commodities strategist James Steel. “Stimulus hopes are tempered by steel output data and inventory gluts.”

Policy Decisions to Dictate Market Trajectory

Market sentiment remains fractured. Infrastructure projects—a government priority—are absorbing some steel demand, but not enough to offset property declines. All eyes now turn to China’s July Politburo meeting, where leaders could unveil new growth measures.

Meanwhile, steel mills are prioritizing inventory drawdowns over new orders. As BHP’s latest market report notes, “Restocking cycles will only emerge once property sales stabilize.” Until then, iron ore faces stiff headwinds.

The path ahead for iron ore prices hinges squarely on China’s next policy moves. With inventories bloated and technicals wavering, traders should brace for sideways movement near $99-$102 until Beijing signals its hand. Monitor steel output and property sector reforms closely—the market’s rebound depends on it.

Must Know

What’s driving the drop in iron ore prices?
China’s 4% decline in H1 2024 imports, high mill inventories (~140M tonnes), and property sector stagnation are key factors. Major miner supply increases also eased shortages.

Could prices recover soon?
Recovery hinges on China’s policy interventions. Infrastructure spending may offset property weakness, but clear signals from July’s Politburo meeting are needed first.

How are technical indicators affecting trades?
Resistance at $100, RSI near overbought levels (62), and bearish MACD patterns have prompted traders to reduce long positions awaiting clearer trends.

Which companies are most impacted?
Vale, Rio Tinto, and BHP face revenue pressures. Chinese steelmakers like Baowu benefit marginally from cheaper inputs but suffer from weak end-user demand.