Iron Ore Pushing Higher Despite Demand Concerns
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Iron Ore Rally Continues
Iron ore prices are pushing higher again today as the conflict in the Middle East keeps the market underpinned. Spot prices are now up almost 8% off the YTD lows, recovering more than half the ground lost form the January highs. The move higher has been attributed to tighter liquidity in the spot market which is helping prices outshine typically low seasonal demand. Indeed, traders note that demand from steel factories remains low in line with expectations, suggesting that the push higher might run out of steam soon.
Better China Data – But Demand Concerns Linger
The recent uptick has also been helped by better data out of China. A jump in the Chinese manufacturing PMI last month alongside a surge in exports, is helping lift commodities prices currently. However, digging into the data there are some points of concern for iron ore in particular. The latest data showed declining new export orders for Chinese steel, adding to an environment of weak demand. With global trade now being disrupted by the war in the Middle East, iron ore prices could start to correct lower soon particularly if we hear any news of falling profits at Chinese steel makers (leading to expectations of site closures). Additionally, a fresh push higher in USD could also hinder upside in iron ore, putting additional pressure on demand for the metal.
Technical Views
Iron Ore
The move lower in iron ore has stalled for now into a test of the 739.14 level with price now bouncing higher again. Momentum studies are bullish here, suggesting room for a continuation higher. However, we have major resistance overhead with the 815 level and bear trend line from 2024 highs. While this area caps the market, fresh range rotation lower is likely near-term.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.