Iron ore futures maintained a narrow trading range on Tuesday as investors weighed the implications of new temporary tariffs on Chinese steel against strong short-term demand from China. The most-traded September iron ore contract on China’s Dalian Commodity Exchange rose 0.21% to 711 yuan ($97.26) per metric ton. Conversely, the benchmark May iron ore on the Singapore Exchange fell by 0.87% to $98.5 a ton as of 0705 GMT.
Concerns regarding tariffs are impacting steel exports, thereby affecting the demand outlook for iron ore in the second quarter. On Monday, India enacted a 12% temporary tariff, or safeguard duty, on certain steel imports to control the influx of cheap shipments primarily from China. In response, Beijing accused Washington of misusing tariffs and cautioned countries against entering broader economic deals with the U.S. that could be detrimental to its interests.
Despite government efforts to limit output, steel production in China increased by 4.6%, reaching 93 million tonnes in March, according to data from ANZ. They also noted that robust iron ore purchases by steel mills combined with lower imports led to a significant decline in inventories. Total iron ore stockpiles at Chinese ports decreased by 2.39% week-on-week, totaling 134.6 million tons as of April 18, according to Steelhome data.
Nevertheless, hot metal output saw a minor decline of 1,000 tons month-on-month, and steel mill profits have diminished, as noted by Everbright Futures. This hot metal output typically serves as an indicator of iron ore demand. On the supply front, iron ore shipments from Australia and Brazil saw a slight increase of 0.1% compared to the previous week, reported consultancy Mysteel.
Other steelmaking materials on the DCE also saw declines, with coking coal and coke falling by 2.42% and 1.83%, respectively. Meanwhile, steel benchmarks on the Shanghai Futures Exchange weakened, with rebar, hot-rolled coil, and wire rod prices all dropping.