Iron ore prices fell lower over this week, continuing their decline as fund managers further squared their long positions. Since the announcement by the Chinese Premier that he intends to cut the nation’s steel-making capacity, iron ore prices have cratered by over 30%.
Further losses are expected as rising geopolitical tensions are exacerbating the sell-off with traders rushing to exit long trades. Alongside the forecast cuts in steel capacity, iron ore inventories at Chinese ports, which are sitting near record levels, are also weighing on the metal. Stockpiles have now increased to 134 million tonnes this year, up more than 30% from the first half of 2016.
The heavy sell-off in iron ore has taken price back down to just above the December low at 69.87 which is the last key support in iron before a much larger move down to retest the mid-2016 highs around the 62 mark. To the topside, any rebound is expected to find resistance at a retest of the 73.72 – 74.48 area where trend traders are likely to step in for a renewed push lower.
Read more: https://www.orbex.com/blog/2017/04/weekly-commodities-wrap-iron-30-since-march-5th/