Iron Ore Hits Two-Week Low on China Steel Demand Fears
Iron ore prices fell to a two-week low, extending losses to a fourth session, as concerns over weakening steel demand in China weighed on the commodity.
Iron ore prices slid to a two-week low on Tuesday, extending their losing streak to a fourth consecutive session — the longest run of declines in nearly three months. The drop was driven by mounting concerns over weakening steel demand in China, the world's top consumer of the commodity. The most-traded January 2025 contract on the Dalian Commodity Exchange fell 2.3% to 780 yuan per metric ton, while the benchmark 62% Fe fines for delivery to northern China dropped to $105 per ton, according to data from NowPrice. This marks a significant retreat from the recent highs seen in early October, when prices briefly touched $120 per ton amid hopes of a demand recovery.
The sell-off reflects growing unease among traders about the outlook for China's steel sector, which has been under pressure from a prolonged property market downturn and slowing industrial activity. As a key input for steelmaking, iron ore is highly sensitive to shifts in Chinese demand. The recent slide has pushed prices below key technical levels, such as the 50-day moving average, raising the possibility of further downside if fundamentals continue to deteriorate. The weakness in iron ore is also being exacerbated by rising port inventories, which have climbed to 150 million tons, the highest level since April, indicating ample supply. For the latest real-time prices, traders can track NowPrice's commodities quotes.
Looking ahead, market participants will focus on upcoming Chinese economic data, including industrial production and fixed-asset investment figures, for clues on demand trends. Any signs of stimulus from Beijing, such as additional infrastructure spending or property sector support, could provide a floor for prices, but absent such catalysts, the near-term bias remains bearish. Traders should also monitor port inventory levels and steel mill margins for further signals. A sustained drop in mill margins, currently hovering near breakeven, could prompt further production cuts, weighing on iron ore demand. The next key support level for Dalian iron ore is at 750 yuan per ton, a breach of which could open the door to a test of the August low of 720 yuan.