Iron ore remains one of the most vulnerable commodities to China’s fluctuating market, but its prices have shown more resilience compared to other major commodities, such as crude oil and copper, especially amidst the recent tariff chaos initiated by U.S. President Donald Trump. On the Singapore Exchange, iron ore futures ended at $99.54 per metric ton, marking a three-month low and a 4.1% drop since Trump’s announcement of sweeping tariffs on U.S. trading partners. China is a significant player in the iron ore market, accounting for about 75% of global seaborne iron ore imports and producing over half of the world’s steel.
The domestic iron ore futures in China have been relatively stable, suffering only a 3.6% decline since the tariffs were introduced. In stark contrast, Brent crude futures fell 14.1%, while London-traded copper contracts decreased by 10%. The broader market dynamics for these commodities are more sensitive to shifts in sentiment compared to iron ore, making iron ore’s performance seemingly out of sync with tariff impacts.
Recently, Trump intensified the tariff situation, threatening an additional 50% on imports from China following Beijing’s retaliatory tariff increases. If these tariffs are enacted, China’s exports to the United States may face a staggering 104% duty, potentially halting trade between these two economic giants. The outlook for iron ore could shift negatively if China’s manufacturing sector falters due to weakened demand for exports, which directly affects steel consumption.
The crucial question is whether the Chinese government will implement measures to stimulate the economy. If successful, iron ore demand and prices may remain stable, especially if steel output holds steady. Recent data shows that China imported 102.1 million tons of iron ore in March, reflecting a recovery from previous fluctuations, despite ongoing tariff uncertainties.
Moreover, metallurgical coal, another vital steel-making ingredient, has shown mixed responses. While prices on the Singapore Exchange increased by 5.9% due to weather-related disruptions in Australia, the domestic Chinese market for coking coal experienced a slight decline, indicating emerging demand concerns amid tariff uncertainties.