Iron ore futures extended their losing streak on Monday, marking the sixth consecutive session of declines, as escalating trade tensions between the United States and China weighed on market sentiment. However, the fall was cushioned by optimistic Chinese manufacturing data, which pointed to an improving industrial sector in the world’s largest consumer of iron ore.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) slipped by 0.75% to 796 yuan ($109.32) per metric ton as of 0254 GMT, having earlier touched 788 yuan, its lowest level since January 16. Similarly, the benchmark March iron ore contract on the Singapore Exchange (SGX) shed 0.15% to $103.1 per ton.
The persistent decline in iron ore prices highlights growing concerns about global trade and demand. Market participants remain wary after the U.S. announced new tariffs on Chinese imports, including a 25% duty on all steel and aluminum products set to take effect on March 4. The tariffs threaten to disrupt China’s steel sector, which heavily relies on transshipments and export markets.
Trade tensions between the U.S. and China have been escalating once again, with U.S. President Donald Trump announcing a fresh wave of tariffs last week. In addition to a 10% tariff on Chinese imports, the White House confirmed a 25% duty on all steel and aluminum imports starting this month.
In a response that could significantly alter trade flows, Mexico has proposed matching U.S. tariffs on China, as stated by U.S. Treasury Secretary Scott Bessent on Friday. This move aligns with Washington’s efforts to curb China’s dominance in global trade and steel production, which has often been criticized for creating an oversupply and depressing global prices.
The U.S. steel tariffs could disrupt approximately $7 billion worth of Chinese steel transshipments, a critical segment of China’s struggling steel sector, according to Reuters. These tariffs add pressure to an industry that has been battling sluggish domestic demand, high raw material costs, and regulatory crackdowns on excessive production.
Despite mounting trade concerns, China’s factory activity expanded at a faster pace in February, providing some relief to the market. A private-sector survey released on Monday indicated a rebound in supply, demand, and export orders, which aligns with the official Purchasing Managers’ Index (PMI) data published on Saturday. The PMI report revealed that February’s manufacturing activity grew at the fastest rate in three months, suggesting that Beijing’s economic stimulus measures are helping stabilize the economy.
The Chinese government has been implementing a series of fiscal and monetary policies to support industries impacted by the prolonged property sector downturn and weak domestic consumption. These measures appear to be showing results, with increased production and stronger order books reported by key manufacturing firms.
Analysts believe that while trade tensions remain a significant risk, the improving factory output and industrial activity could provide some support for steel and iron ore prices in the near term.
Despite the drop in iron ore prices, other steelmaking raw materials gained ground on the Dalian Commodity Exchange. Coking coal rose 1.46%, while coke climbed 1.31%, signaling resilience in the demand for steel-related commodities.
Meanwhile, steel benchmarks on the Shanghai Futures Exchange (SHFE) edged higher:
Rebar and stainless steel gained 0.3% each
Hot-rolled coil advanced nearly 0.6%
Wire rod climbed 0.54%
The gains in steel prices indicate that demand for construction materials remains steady, despite concerns over trade disruptions and slowing global growth.
The current downward trend in iron ore prices raises questions about the outlook for the global market. Analysts suggest that iron ore demand in China could remain volatile in the coming months, as the government grapples with balancing economic growth, environmental policies, and trade pressures.
“While Chinese industrial activity appears to be improving, the ongoing trade tensions with the U.S. add uncertainty to the iron ore and steel markets. If the tariffs remain in place and further retaliatory measures are introduced, we could see a more prolonged period of price weakness,” said Chen Xudong, a senior commodities analyst at Beijing-based CITIC Futures.
Adding to the complexity, China’s property market remains a major source of concern. The real estate sector accounts for a significant portion of steel consumption, and weakness in housing construction could dampen demand for iron ore. Government intervention and stimulus measures will be crucial in determining whether the sector can recover.
Investors remain cautious, keeping a close watch on developments in U.S.-China trade relations and Chinese economic policies. The Chinese government’s push for infrastructure projects and industrial growth could provide some upside potential for iron ore and steel prices, but geopolitical risks and trade barriers pose ongoing threats.
For now, the global iron ore market remains highly sensitive to policy changes, trade negotiations, and economic data. Traders will be watching for further statements from the U.S. and Chinese governments regarding trade policies, as well as any potential monetary easing measures from China’s central bank to stimulate growth.
With iron ore futures declining for the sixth consecutive session, the key question for market participants is whether China’s industrial recovery will be strong enough to offset the negative impact of trade frictions and weakening global demand.
As of now, the iron ore market remains at a crossroads, with both bullish and bearish factors shaping price trends in the weeks ahead.
