Iron ore futures experienced a sharp decline on Monday, primarily due to escalating trade tensions between the U.S. and China, the largest consumer of the commodity. The May iron ore contract on China’s Dalian Commodity Exchange closed with a 3.36% drop, finishing at 762.5 yuan ($104.31) per metric ton. During the trading session, prices fell to 754 yuan, marking their lowest point since March 21.
At the same time, the benchmark iron ore price on the Singapore Exchange also faced significant pressure, decreasing by 2.8% to $97.8 per ton. Earlier in the day, it reached a near three-month low of $96.4. Analysts from broker Galaxy Futures indicated that ongoing external shocks, particularly arising from new U.S. tariffs, are expected to further depress iron ore prices in the near term.
The escalation of the trade war has led to a notable decline in Chinese stocks, as concerns mount over potential disruptions to trade flows and a consequent slowdown in global demand. China’s recent implementation of additional 34% tariffs on all U.S. imports followed U.S. President Donald Trump’s similar move, intensifying the economic conflict between the two nations. Despite a seasonal increase in demand for iron ore due to steel production ramping up in March and April, the trade war’s impact has overshadowed these gains.
Data from Everbright Futures reported a monthly rise in hot metal production, reaching 2.3873 million tons, up by 14,500 tons. However, other key steelmaking ingredients also fell in value; coking coal and coke lost 2.06% and 2.21%, respectively. Additionally, steel benchmarks on the Shanghai Futures Exchange continued to struggle, with significant declines in rebar, hot-rolled coil, wire rod, and stainless steel.