Iron ore futures continued their downward trend on Tuesday, just hours before the U.S. tariffs on Chinese imports were set to take effect, signaling concerns over trade tensions.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) fell by 1.39%, reaching 779 yuan ($106.93) per metric ton as of 0307 GMT. Meanwhile, the benchmark April iron ore on the Singapore Exchange edged down by 0.18%, trading at $99.7 per ton. Earlier in the session, prices hit $99.35, the lowest point since January 15.
The drop follows reports that Chinese steel mills are scaling back production to reduce pollution levels ahead of the National People’s Congress (NPC) meeting. “Iron ore dipped below $100 per ton yesterday for the first time since mid-January,” said ING analysts. “The move coincided with Chinese mills reducing output.”
As markets shift focus to the NPC meeting on Wednesday, Chinese stocks opened lower, with growing concerns over the impact of trade tensions with the U.S. Beijing has vowed to retaliate against the newly imposed U.S. tariffs, potentially targeting American agricultural and food exports.
This comes after U.S. President Donald Trump’s recent threat to increase tariffs on Chinese imports, raising the levy by 10%, bringing it to a cumulative 20%. The tariffs are set to take effect at 0501 GMT on Tuesday.
The tariff uncertainty also led to declines in shares of Australian miners, as China remains a key trading partner for resource-driven Australia. Despite the ongoing tensions, Chinese consultancy Mysteel expects China’s steel market to recover, buoyed by increasing consumption from steel end-users this month. The consultancy also suggests that market sentiment could be supported by expectations of more policy stimulus in China.
On the DCE, other steelmaking ingredients also saw losses, with coking coal down 1.26% and coke falling 1.42%. Meanwhile, steel benchmarks on the Shanghai Futures Exchange suffered losses across the board. Rebar dropped 1.3%, hot-rolled coil slid by nearly 1%, wire rod decreased 0.62%, and stainless steel saw a slight dip of 0.11%.
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