Iron Ore Futures Rise Amid Tariff Concerns

Iron ore futures experienced a slight increase on Tuesday, propped up by short-term demand from China, the world’s largest consumer. However, ongoing concerns about tariffs put a lid on stronger gains.

The most actively traded September iron ore contract on the Dalian Commodity Exchange (DCE) in China saw a 0.49% rise, reaching 713 yuan ($97.50) per metric ton as of 0253 GMT.

Meanwhile, the May iron ore benchmark on the Singapore Exchange showed a decrease of 0.76%, settling at $98.6 per ton.

Demand and Supply Dynamics

Analysts at ANZ noted that robust iron ore purchases by steel manufacturers, coupled with reduced imports, led to a notable decline in inventories. They added that steel production increased by 4.6% in March, reaching 93 million tonnes, despite governmental efforts aimed at limiting capacity.

Data from Steelhome indicated that total iron ore reserves across Chinese ports decreased by 2.39% compared to the previous week, reaching 134.6 million tons as of April 18.

On the supply side, consultancy Mysteel reported a marginal increase of 0.1% in iron ore shipment volumes from Australia and Brazil compared to the week prior.

Tariff Impact

According to broker Galaxy Futures, concerns about tariffs are impacting steel exports, which in turn affects the demand outlook for iron ore in the second quarter.

China has accused the United States of misusing tariffs and cautioned nations against forming broader economic agreements with the U.S. at China’s expense. On Monday, India imposed a temporary 12% tariff on specific steel imports, known locally as a safeguard duty, to curb a surge in inexpensive shipments, primarily originating from China.

Other steelmaking components on the DCE declined, with coking coal and coke decreasing by 1.89% and 1.51%, respectively. Steel benchmarks on the Shanghai Futures Exchange also weakened.

Rebar fell by 0.13%, hot-rolled coil declined by approximately 0.2%, wire rod edged down by 0.06%, and stainless steel dropped by 0.55%.