Recently, I’ve been paying attention to a quite interesting item: iron ore (what is it that makes it so heavily traded?). Actually, what iron ore is not very complicated — it’s simply the metallic iron extracted for steel production, accounting for up to 98% of mining output. Steel is widely used in construction, infrastructure, energy, and even electric vehicle manufacturing, so iron ore is always an important commodity.

But what’s the interesting part here? The price of iron ore is heavily influenced by China — the country that accounts for over 70% of global import market share. I’ve noticed that any changes in China’s real estate market or economic policies tend to cause fluctuations in iron prices. For example, in 2022, when China implemented its Zero-COVID policy, iron ore prices dropped more than half due to decreased steel demand.

Supply is another factor. Australia and Brazil are the two largest producers, with Australia accounting for 34% of global output. Any disruption from these countries — such as the Brumadinho dam disaster in Brazil in 2019 — can push iron prices up by 20-30% within a few weeks.

I also observe that Fed interest rates and USD prices have an indirect but quite strong impact. When the Fed raises interest rates, the USD strengthens, investment sentiment in commodities weakens, and iron prices tend to fall. Conversely, when the Fed loosens policy, commodities become more attractive.

Looking at technical analysis, from May until now, the Fe 62% iron ore price has been fluctuating within a range, around 108. The MACD is trending upward, but resistance is quite thick at the Kumo cloud and MA100 levels. If a triangle pattern breaks, the price could rise to 111.8 or 114.4.

However, fundamentally, the outlook isn’t very bright. China’s economy remains sluggish, its real estate market is dull, and home sales dropped 28% in July 2023. Meanwhile, supply from Rio Tinto and Vale continues to grow steadily by 2-3% annually. In the long term, iron prices could continue to fall to around $50/MT if environmental regulations tighten further.

Trading iron ore can be done in many ways: futures contracts on CME or ICE, CFDs through licensed brokers, or ETFs like VanEck Vectors Steel ETF, or stocks such as Rio Tinto, Vale, and BHP. I usually combine fundamental analysis (monitoring Chinese data, mining activity) with technical analysis to find good entry points.

The most important thing is strict risk management. Don’t put all your capital into one asset; diversify your portfolio, set reasonable stop-losses, and use leverage carefully. I also keep records of each trade to learn from mistakes. The iron ore market offers many opportunities, but also plenty of risks — only knowledge and discipline will help you profit in the long run.