BEIJING: Iron ore futures rebounded on Thursday, as an escalating Sino-U.S. trade war lifted expectations of Beijing announcing more aggressive stimulus measures to counter the negative impact of the tariffs.
On Wednesday, top metals consumer China, in response to U.S. President Donald Trump hiking duties on Chinese goods to 104%, said it would raise tariffs on U.S. imports to 84% from 34% earlier.
Trump retaliated with an even higher 125% tariff.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) climbed 3.13% to 707.5 yuan a metric ton as of 0249 GMT, after falling to their lowest in more than six months on Wednesday.
The benchmark May iron ore on the Singapore Exchange added 1.13% to $95.85 a ton. It hit an intraday high of $99.5 earlier in the session.
“The prospect of a prolonged trade war has also raised expectations for Beijing to unveil more aggressive stimulus measures,” ING analysts said.
China needs to implement more proactive macroeconomic policies and roll them out promptly as “external shocks” have pressured China’s economic stabilisation, Premier Li Qiang said.
Other steelmaking ingredients on the DCE also gained ground, with coking coal and coke up 0.71% and 2.17%, respectively.
Iron ore slips as global trade war intensifies
Steel benchmarks on the Shanghai Futures Exchange advanced. Rebar gained 1.98%, hot-rolled coil added 2.41% and wire rod rose 3.58%. Stainless steel was flat.
Meanwhile, Trump in a stunning U-turn announced a 90-day pause on the hefty duties for trading partners that didn’t retaliate, boosting market sentiment and sending metals soaring.
But China’s steel exports this year might fall below the 70 million tons hit due to the intensifying trade tensions, Chen Kexin, an analyst at consultancy Lange Steel, said, adding that exports won’t tumble in the first half of the year due to front-run shipments.
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