Dalian Iron Ore Drops to Near Three-Month Low Amid U.S.-China Tariff Tensions

Iron ore

Iron Ore Futures Decline as Trade War Escalates

Iron ore futures slumped for the third consecutive session on Tuesday, reaching their lowest levels in nearly three months. Market concerns over escalating U.S.-China trade tensions overshadowed seasonal demand increases for the steelmaking ingredient.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) fell 1.84% to 748.5 yuan ($102.15) per metric ton as of 0320 GMT. Earlier in the session, the price hit 745.5 yuan, marking its lowest since January 9. Meanwhile, the benchmark May iron ore contract on the Singapore Exchange dropped 1.9% to $95.7 per ton.

"Iron ore futures have unsurprisingly responded to yet another escalation in tit-for-tat trade measures between the world’s two largest superpowers," said Atilla Widnell, managing director at Navigate Commodities.

Trade War Impact on Commodities

The ongoing trade dispute has taken a toll on commodities markets. U.S. President Donald Trump has announced plans to impose an additional 50% duty on imports from China if Beijing does not withdraw the 34% tariffs it levied on U.S. products last week. The heightened tensions have weighed heavily on investor sentiment, counteracting rising demand for iron ore as steelmakers ramp up production during the peak construction season in March and April.

Despite the trade war concerns, Chinese domestic iron ore output remains strong. According to consultancy Mysteel, total iron ore concentrate production among domestic mining enterprises reached a nine-month high. However, the broader market remains cautious due to geopolitical uncertainties.

Steel and Raw Material Markets Decline

Other steelmaking ingredients also recorded losses. On the DCE, coking coal and coke prices declined by 1.44% and 0.47%, respectively. Steel benchmarks on the Shanghai Futures Exchange followed the downward trend: rebar edged down 0.3%, hot-rolled coil dropped 0.83%, wire rod slipped 0.24%, and stainless steel fell 0.58%.

"This latest escalation in U.S.-initiated trade measures significantly increases the probability of China unleashing further stimulus," Widnell added, suggesting that Beijing may introduce policies to mitigate economic risks caused by trade disruptions.