Iron Ore Prices Fall 0.4% Amid Trump Tariffs

The price of iron ore has declined in recent days, primarily due to the impact of tariffs announced by former U.S. President Donald Trump. The most active iron ore contract on the Dalian Commodity Exchange fell by 0.4%, reaching 788.00 yuan per ton. This tariff, which was higher than expected, is anticipated to exert short-term downward pressure on prices.

The new tariff policy implemented by Trump has increased global market uncertainty, which in turn has suppressed demand for iron ore. As a crucial raw material for steel production, iron ore is highly sensitive to changes in trade policies. China, the world's largest importer of iron ore, is experiencing a complex economic environment. While the production of pig iron continued to rise in March, factory activities reached a four-month high, supporting steel demand. However, the real estate market remains sluggish, with housing prices in 100 cities continuing to decline. This could reduce the demand for steel in construction and infrastructure projects, ultimately affecting iron ore consumption.

The tariff policy announced by Trump has also affected the global market for iron ore. The policy includes a 10% minimum tariff on all imported goods, with certain trading partners facing even higher tariffs. This decision indicates that the U.S. government has reserved policy space for the metal market, which Trump has long been concerned about. This move provides some buffer for domestic buyers in the U.S., who currently pay a 25% tariff on all key metal imports.

The impact of the tariff policy is not limited to the U.S. market. In China, the cost of iron ore is expected to decrease further due to the tariffs. The supply of iron ore is abundant, and the prices of coking coal and coke are at their lowest levels. This will drive down the cost of pig iron, which in turn will drag down the price of scrap steel. Additionally, electric arc furnaces are operating at a loss, further exacerbating the downward pressure on scrap steel prices.

The tariff policy is also expected to have a significant impact on the global economy. The policy aims to address the trade deficit by imposing higher tariffs on countries with the largest trade surpluses with the U.S. This could lead to a shift in the global supply chain, with some countries potentially benefiting from the tariffs while others face increased costs. For example, Australian consumers may benefit from lower prices for European and Asian goods that are redirected to Australia, while iron ore miners in Australia could face potential losses.