Iron Ore Gaps Lower
We’re seeing plenty of volatility in the iron ore market on Wednesday following the release of the latest China economic data overnight. The manufacturing PMI was seen dropping further into negative territory last month at 48.8, down from 49.2 prior and below the 49.5 reading the market was looking for. Concerns over the health of the factory sector in the world’s second largest economy have been a key factor over recent months as the post-reopening recovery started to wane. With this last month’s data serving as evidence of a further slowdown, risk sentiment is taking a bit of a knock.
Softer Demand for Iron
Given that China, as of last year, was seen importing more than 70% of the world’s produced iron ore, the impact of a slowing of the factory sector cannot be underestimated for iron ore prices. With the demand outlook there softening, iron ore prices look vulnerable to further weakness. This is particularly true given the combination of a stronger US Dollar also. Weakness in the Chinese real estate sector has also been an issue for iron ore prices with softer demand seen among steel producers recently too, adding to bearish sentiment.
Technical Views
Iron Ore
The sell off in iron ore prices has seen the market continuing lower within the bear channel from YTD highs. Price is currently sitting on support at the 98.40 level. This is a key support level for the metal and a break lower here will be firmly bearish putting the focus on 88.70 as the next support, along with a further test of the channel lows.
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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.