SINGAPORE: Iron ore futures slid on Friday and were set to end the week lower, weighed by the European Commission’s plan to impose steep tariffs on Chinese steel imports.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.56% lower at 799.5 yuan ($112.10) a metric ton as of 0310 GMT, and was poised to end the week 0.74% lower.
The benchmark September iron ore on the Singapore Exchange fell 0.09% to $105.5 a ton, and was set to end the week down 0.19%.
The European Commission plans to levy tariffs of 25%-50% on Chinese steel and related products in the coming weeks, per German business daily Handelsblatt.
The measure aims to limit steel imports and safeguard domestic producers as global overcapacity continues to pressure profit margins.
Analysts estimate China’s steel exports will reach a record high this year, a trend exacerbated by weak demand in the domestic property sector.
Restricting steel imports from China is primarily aimed at supporting domestic steel producers and ensuring the survival of local industries, said a Singapore-based trader on condition of anonymity as they are not authorised to speak to media.
These measures reflect growing concerns as Western economies increasingly recognise the importance of maintaining some domestic manufacturing capacity for strategic resilience, the trader added.
Inventories of the five main carbon steel products at Chinese steel mills rose 0.7% week-on-week during September 19-25, reversing declines from the previous two weeks, according to data from Chinese consultancy Mysteel.
Analysts at ANZ noted that the pace of inventory growth accelerated in recent weeks, supporting both steel and the raw materials markets.
Other steelmaking ingredients on the DCE fell, with coking coal and coke losing 0.98% and 1.49%, respectively. Steel benchmarks on the Shanghai Futures Exchange retreated.
Rebar fell 0.73%, hot-rolled coil eased 0.63%, wire rod lost 0.43% and stainless steel dipped 0.58%.
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