IO Weekly Technicals Review [2025/10]: Bearish Outlook Grows
55
SGX TSI Iron Ore CFR China (62% Fe Fines) Index Futures (“SGX IO Futures”) declined last week, closing USD 1.75/ton lower by 7/Mar (Fri).
Friday’s T+1 session is depicted as the following Monday’s trading session on TradingView.
SGX IO Futures opened at USD 102.20/ton on 3/Mar (Mon) and closed at USD 100.45/ton on 7/Mar (Fri).
Prices briefly touched a weekly high of USD 102.85/ton on 3/Mar (Mon) and a low of USD 98.95/ton on 5/Mar (Wed). It traded in a range of USD 3.90/ton during the week, which was narrower than the prior week.
Prices remained below the pivot point of USD 104.05/ton and R1 point of USD 102.55/ton during the week, closing below the pivot point at USD 100.75/ton. Volume peaked on 3/Mar (Mon). Volumes last week rebounded back to pre-CNY levels.
Iron Ore Fundamentals in Summary
Iron ore futures took a hit as China’s steel production cuts and escalating trade tensions between Washington and Beijing dampened market sentiment.
With inventory levels at major Chinese steel mills dipping, demand trends must be carefully observed.
While declining Chinese imports signal a bearish outlook, market sentiment remains fluid. Chinese policymakers hinted at further stimulus measures, suggesting that if economic growth falters, additional support could be on the table—potentially offering a lifeline to the struggling bulk commodities market.
Iron Ore inventory at Chinese ports declined by 142.97 million tons, representing a decline of 3.5% for the w/e 7th Mar 2025.
Based on seasonality, SGX IO Futures Apr contract trades 23.3% below its last 5-year average (USD 130.78/ton).
Short-Term MA Signals Extended Downtrend as China’s Imports Slump
Formation of a death cross on 3/Mar (Mon) plunged iron ore prices sharply lower and the sell-off has been further exacerbated by Trump’s tariff policies and a drop in China's imports, leading to a sharp downtrend.
Prices Trend Downward Amid Potential Long-term Moving Average Divergence
IO prices are trading well below the 100-day & 200-day DMAs. The 100-day moving average marginally inched past the 200-day moving average forming a golden cross on 26th Feb 2025. Given the near term bearishness, IO prices look stubbornly bearish and are unlikely to rally on long term moving average golden cross formation.
MACD Confirms Deepening Downtrend, RSI Inches Towards Oversold Conditions
The MACD line is below the signal line suggesting weakening short-term momentum. Meanwhile, the RSI is at 36.61 inching towards but not yet in oversold conditions. RSI-based moving average hovers at 46.57.
Volatility remained steady this week. Prices traded between the 78.6% Fibonacci level (USD 98.00/ton) and the 61.8% level (USD 100.32/ton), closing below the 61.8% Fibonacci level. Going forward, 78.6% Fibonacci level (USD 98.00/ton) may act as support, with 50.0% Fibonacci level (USD 101.879/ton) as resistance.
Buying Pressure Strengthened & IO Prices Trades At Lower Bollinger Band
Buying pressure strengthened during second half of last week based on A/D indicator. IO prices traded below the lower Bollinger band during the week and closed marginally above the band at USD 100.25/ton.
China’s Two Sessions: A Key Catalyst for Iron Ore Market Swings?
China's Two Sessions (Lianghui) is an annual political gathering in China where key economic and industrial policies are set. This can significantly impact China linked assets including iron ore. Over the past four years (2021-2024), prices have shown a pattern of pre-meeting speculation-driven gains, followed by declines due to policy interventions or cautious economic targets.
While 2021 and 2022 saw initial optimism fueling price spikes before corrections, 2023 and 2024 featured steady declines amid weak demand and rising inventories. This trend underscores China's policy direction as a key driver of iron ore market fluctuations.
Source: TradingView Data and Mint Finance Analysis
IO Futures Only Aggregate Exposure
Financial Institutions (FIs) and Managed Money participants are net long with 87.9k lots and 117.6k across all futures expiries. Physicals participants and Others are net short with 147.7k and 57.8k lots respectively across all futures expires. Managed Money decreased net long positions; Physicals decreased net short positions while FIs increased net long positions last week. Overall futures open interest was 1,249,118 lots as of 28/Feb (+2%) while it was 1,224,213 lots as of 21/Feb.
Financial Institutions (FIs) and Managed Money participants are net long with 89.3k lots and 119.9k across all futures and options expiries. Physicals participants and Others are net short with 144.9k and 64.3k lots respectively across all futures and options expires. Managed Money decreased net long positions; Physicals decreased net short positions while FIs increased net long positions last week. Overall futures and options open interest was 1,500,490 lots as of 28/Feb (-1.63%) while it was 1,525,430 lots as of 21/Feb.
Historical Futures Aggregate Exposure by Market Participants
Physical participants have continued to maintain their net short position. Managed Money participants have switched from net short to being net long in the last three weeks. Financial Institutions continue to hold net long positions since the second quarter of last year.
Iron ore prices have declined owing to China’s steel production cuts and escalating trade tensions between Washington and Beijing dampened market sentiment. With inventory levels at major Chinese steel mills dipping, demand trends have seemed to fallen.
IO prices signaled downtrend last week. The MACD signals strengthening bearishness while the RSI is nearing the oversold territory. IO prices closed below the 61.8% levels indicating bearishness.
Against this backdrop, this paper posits a short position in SGX Iron Ore Futures expiring on 30th April 2025, with an entry at USD 100.80/ton combined with a take profit level at USD 98.10/ton and a stop-loss at USD 103.50/ton resulting in a reward-to-risk ratio of 1x.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.