SINGAPORE: Iron ore futures declined on Wednesday amid worries of heightened trade tensions between the US and top consumer China, while slowing Chinese growth dampened market sentiment.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) eased 0.62% to 804 yuan ($110.37) a metric ton as of 0316 GMT. The benchmark March iron ore on the Singapore Exchange declined 0.85% to $104.15 a ton.
“Sentiment is likely to suffer as Chinese markets reopen and react to the barrage of tariffs on commodities,” ANZ analysts said. US President Donald Trump’s additional 10% tariff on all Chinese imports kicked in on Tuesday.
China responded with tariffs on US imports in a rapid response to the new US duties, renewing a trade war between the world’s top two economies.
“Steelmaking raw materials will also be in focus… Chinese iron ore markets are likely to come under pressure amid concerns of weaker export driven demand,” ANZ added. Beijing’s new measures include a 15% levy on US coal, a key steelmaking ingredient.
Meanwhile, China’s services activity expanded at a slower pace in January, though business sentiment improved, a private sector business survey showed. The country’s factory activity growth similarly slowed, a separate survey showed.
On the supply side, Rio Tinto, said on Tuesday it had begun clearing iron ore ships from two Western Australian ports as two tropical cyclones offshore complicate its efforts to repair infrastructure damaged by a cyclone last month.
In January, Rio warned that its first-quarter shipments could be affected by disruptions to rail operations following record rainfall. Other steelmaking ingredients on the DCE lost ground, with coking coal and coke losing 2.42% and 3.35%, respectively.
Most steel benchmarks on the Shanghai Futures Exchange fell. Rebar slid 1.36%, hot-rolled coil declined 1.7%, wire rod dipped 0.84%, while stainless steel gained nearly 1%.
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