Trade tensions between China and the US due to additional tariffs directly affected iron ore prices. Restrictions on Chinese exports due to tariffs led to a slowdown in the real estate sector and a decline in demand.
After US President Trump's tariff announcement on February 1, the CFR price of 62% iron ore decreased to 105 USD/dmt on February 3. On February 5, it decreased to 104.4 USD/dmt.
On the Dalian Commodity Exchange, iron ore DCIOcv1 decreased by 0.24% to USD 111.94/t. Coke DJMcv1 and cokeDCJcv1 were down 0.74% and 2.25%, respectively.
On the Singapore Exchange, the March iron ore SZZFH5 index decreased by 0.32% to 106 USD/t.
Prices were generally lower on the Shanghai Futures Exchange. Rebar SRBcv1 decreased by 1.25%, hot rolled coil SHHCcv1 by 0.98%, wire rod SWRcv1 by 1% and stainless steel SHSScv1 by 0.75%.
Market analysts said that there is a possibility that the Chinese government may weaken the local currency, the yuan, in order to fight the US tariffs. If this happens, it would also result in less purchasing power to import iron ore from Australia, one of China's major trading partners.
Some sources have lowered their iron ore price forecasts in China to as low as 98 USD/dmt in March amid expectations of weak inventories in the country, rising trade tensions and concerns over whether additional government stimulus will work.
On the other hand, some market participants do not think that China's ability to always find new customers and its market dominance will have any impact on iron ore demand in the short term.
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