Iron ore prices experienced a decline on Monday due to growing concerns over demand. The potential impact of U.S. tariffs and China’s intention to reduce crude steel production this year significantly influenced market sentiment. The May iron ore contract on China’s Dalian Commodity Exchange (DCE) fell by 0.71%, closing at 769 yuan ($105.92) per metric ton. Similarly, the April iron ore benchmark on the Singapore Exchange dropped below the critical $100 mark, settling at $99.8 a ton.
Initially, prices showed some promise as investors awaited further support from Beijing following disappointing inflation data. However, China’s consumer price index for February was notably below expectations, registering the steepest decline in 13 months. The continued producer price deflation raised hopes for additional economic stimulus as China seeks to achieve its growth targets for the year. Despite these hopes, the impending 25% tariffs on all incoming steel into the U.S. dampened demand outlook, casting a shadow over market sentiment.
Additionally, there is increasing uncertainty regarding specific measures that Beijing might announce after committing to limit its crude steel output to combat the industry’s overcapacity. This anticipated reduction in steel production is expected to dampen the demand for key feedstocks like iron ore.
Other materials used in steelmaking also saw declines, with coking coal prices decreasing by 1.35% and coke by 1.97% on the DCE. Various steel benchmarks on the Shanghai Futures Exchange reflected this downward trend, with rebar declining by 1.35%, hot-rolled coil down by 0.89%, and wire rod losing 1.41%. However, stainless steel managed a slight increase of 0.45%.