Iron ore futures experienced a decline on Friday due to persistent uncertainty surrounding Sino-U.S. trade relations, yet managed to secure weekly gains thanks to robust near-term demand in China, the world’s largest consumer of iron ore. The September iron ore contract on China’s Dalian Commodity Exchange settled 1.87% lower at 709 yuan ($97.30) per metric ton, though it saw a slight increase of 0.35% over the week. Similarly, the benchmark May iron ore on the Singapore Exchange fell 0.85% to $98.6 a ton by 0710 GMT, but recorded a weekly gain of 1.08%.
Market analysts at Hexun Futures predict a strong short-term demand for iron ore as steel end-users look to replenish their inventories ahead of the May Day holiday. Additionally, April’s hot metal output, a critical indicator of iron ore demand, rose by 42,300 tons month-on-month to reach 2.4435 million tons, representing a year-on-year increase of 156,300 tons, according to Everbright Futures. Port inventories also saw a rise, climbing approximately 1.56% month-on-month to 147.81 million tons.
Despite some easing in Washington’s approach towards China, there remains significant uncertainty regarding the status of trade negotiations. Recently, U.S. President Donald Trump confirmed that discussions with China are ongoing, in contrast to conflicting statements emerging from Beijing. This ambiguity surrounding the trade war continues to inject volatility into global markets.
Furthermore, China is contemplating the exemption of specific U.S. imports from its hefty 125% tariffs and has encouraged businesses to identify potential eligible goods. In related markets, other steelmaking materials traded relatively sideways, with coking coal witnessing a modest increase of 0.05% while coke dropped by 1.29%. Steel benchmarks on the Shanghai Futures Exchange also showed weak performance, with losses seen across various categories: rebar decreased nearly 0.5%, hot-rolled coil fell by 0.31%, wire rod dropped 1.17%, and stainless steel decreased by 0.59%.