The bearish risks for iron ore are mounting, with Chinese steel output and construction slumping, port inventories building and a wave of new supply en route to China.
The spot price of benchmark 62% iron ore for delivery to north China, as assessed by commodity price reporting agency Argus, has so far taken the latest negative news in its stride. Last week's trading range was narrow.
But since iron ore's record high of $235.55 a tonne in May, the steel-making ingredient has traded in a range of between $100 and $137 for the past two months.
This is a price more in line with a balanced market, where demand from China, which buys about 70% of global seaborne iron ore, remains firm and supply from top exporters Australia, Brazil and South Africa is close to potential.
However, there are increasing signs that the comfortable balance of the past two months is under threat from both lower Chinese demand and higher supply.
China's daily steel output fell in September to the lowest since December 2018, with a total of 73.75 million tonnes produced in the month, down 21% from the same month a year earlier, and 9% below August's daily average.
The faltering steel output has been blamed on production curbs as a result of Beijing's aim of cutting pollution and energy use, and ensuring that annual steel output doesn't exceed last year's record 1.07 billion tonnes.
If that target is to be met, steel output in coming months will also have to be constrained, given that in the first nine months of 2021, it was up 2% from the same period last year, coming in at 806 million tonnes.
Demand for steel is also being called into question, with China's new construction starts slumping for a sixth straight month in September, dropping 13.54% from the same month in 2020.
And if the demand outlook for steel raises some questions, the supply of iron ore asks a few more.
The rally to the all-time high was largely driven by then record-high Chinese steel output, weather-disrupted supply from top exporter Australia and coronavirus constraints in No. 2 shipper Brazil.
Supply has largely recovered and the increasing availability of iron ore is showing up in inventories at Chinese ports.
Overall, the dark clouds are gathering over the near-term outlook for iron ore, and the question for the market is how long the spot price can remain sanguine.
Russell is a columnist for Reuters based in Australia.
