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Iron Ore Testing Multi Month Lows Amid Multiple Headwinds

IRON ORE

The active iron ore contract on the SGX is testing multi month lows, last near $101.5/ton. This is just below late June lows. The next logical downside target is a test of the $100/ton level. The 20-day EMA sits back at $107/ton on the topside.

  • Iron ore weakness is consistent with softer onshore steel prices. Both hot rolled coil and steel rebar futures are both off more than 1%. Rebar futures are back close to early April lows.
  • The CSI 300 is off a little over 1% in the equity space, with equity sub indices tracking down for the third straight session. Yesterday's rate moves not doing much to boost sentiment at this stage.
  • Broader metal prices have also been under pressure. The Bloomberg metals sub index off nearly 1.5% in Monday's session the 6th straight loss. The index is back to levels from early April.
  • The chart below overlays this index against spot iron ore prices. Over supply (with copper inventories)/China demand concerns are weighing on broader sentiment in the complex.

Fig 1: Iron ore & Bloomberg Metals Sub Index


Source: MNI - Market News/Bloomberg

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