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Iron ore prices have rebounded once again after a slight fall in the recently over uptick in port stocks and supply ease across China. The commodity topped around RMB 1,194 per dry metric tonne on the Dalian Commodity Exchange (DCE) but took a U-turn over building stockpiles to hit RMB 1,045.00 per dmt (intraday low on 30 December 2020).
However, the commodity has had a positive start in 2021 with prices surging in China. While the commodity is still slightly below its recent top in China, it is trading strong on the global front with prices now surging to USD 166.08 per dmt (as on 6 January 2020), marking a decade high.
The iron ore port stocks across China improved slightly for the period 27 December 2020 to 2 January 2021 with around 82 vessels carrying about 14.26 million metric tonnes of iron ore hitting the docks, delivering 820,000 metric tonnes higher iron ore as against the previous week.
While the Australia supply leaving for China declined by 1.09 million metric tonnes for the same period, the Brazilian supply surged by 90,000 metric tonnes, easing the impact of the Brazilian supply tension.
On the flip side, the demand took a slight hit with many mills going on maintenance over severe weather across China. However, with COVID-19 vaccines rolling-in, the economic growth is once again back as one of the top agenda for many governments across the world, which in turn, is keeping the demand for iron ore buoyant on the global front.
Iron Ore price crystal gazing via charts
Iron Ore Futures Continuation Chart (Source: Refinitiv Eikon Thomson Reuters)
On following the daily chart of the commodity, it could be seen that iron ore has attempted a breakout of the downward sloping short-term trendline. The ability of the commodity to sustain the breakout could seed bullish sentiments (short-term), prompting it to test the primary resistance at the +2 Standard Deviation of the 20-day simple Bollinger Band®.
On the support counter, the primary support for the commodity is at the upward sloping trendline, which is slightly overlapping with the 20-day SMA. A break and price action below the same could seed bearish sentiment (short-term), prompting iron ore to test its major support at -2 Standard Deviation of the Bollinger Band®, which is overlapping with the 50-day EMA; thus, could prove to be decisive in nature ahead.
ASX-listed Iron Ore Stocks
A momentum in iron ore prices along with increasing margin on futures over increased price volatility in the contract have diverted many investors towards iron ore stocks to retain their exposure in the price rally, leading to a sentimental gush in many ASX-listed iron ore stocks.
Image Source: © Kalkine Group 2021
Iron ore has been showing a consistent rally, and it also has been one of the top-performing commodity of the year 2020, which in a cascade also has led to a rush in many ASX-listed iron ore stocks with some such as Fortescue Metals Group Limited (ASX:FMG) hitting record highs almost every now and then.
Likewise, many stocks such as BHP Group Limited (ASX:BHP) has seen a same bullish spree with the stock now jolting a record high of $46.515 (as on 7 January 2020, 12:34 PM AEDT).
