Iron ore is probably the commodity most exposed to China and while the price of the steel raw material has eased, it has held up better than other major commodities like crude oil and copper in the wake of U.S. President Donald Trump’s tariff turmoil.
Iron ore futures traded on the Singapore Exchange ended at $99.54 a metric ton on Monday, a three-month low and down 4.1% from the $103.77 close on April 2, the day Trump imposed sweeping tariffs on U.S. trading partners.
The Singapore contracts largely reflect the views of market participants outside of China, which buys about three-quarters of all global seaborne iron ore and produces just over half of the world’s steel.
But even China’s domestic iron ore futures on the Dalian Commodity Exchange have held up, losing just 3.6% since April 2 to Monday’s close of 762.50 yuan ($104.31) a ton.
In contrast to iron ore’s relatively modest declines, Brent crude futures shed 14.1% from April 2 to Monday’s close of $64.36 a barrel, a four-year low, while London-traded copper contracts dropped 10% to end at $8.732 a ton.
China is the world’s biggest buyer of crude and copper, but unlike iron ore these commodities have a broader investor base and tend to more rapidly reflect changes in market sentiment and dynamics.
But even so, iron ore’s performance seems at odds with Trump’s announcement last week of a 34% tariff on U.S. imports from China, which was on top of 20% already imposed.
The mercurial U.S. president doubled down on Monday, threatening an additional 50% on imports from China after Beijing responded with a 34% tariff of its own on imports from the United States, as well as export controls on a series of minor metals, many of the critical to defense and technology.
If all the threatened tariffs go ahead, China’s exports to the United States will face an impost of 104%, which would likely have the effect of ending all trade between the world’s two largest economies.
OUTLOOK DARKENS
In this scenario it’s hard to construct a case that iron ore will continue to outperform other major commodities, it’s actually easier to see it suffering more.
Manufacturing accounts for about 25% of China’s steel demand, so any major hit to this sector from weaker demand for exported goods such as appliances and vehicles will flow directly through to steel consumption.
The question is whether Beijing will take decisive action to stimulate both parts of the economy hit by tariffs and other sectors not as exposed but capable of helping boost overall economic growth.
If China does act to boost its economy through stimulus of sectors such as infrastructure and consumer spending on manufactured goods, it becomes a matter of whether this will be enough to keep steel demand at relatively strong levels.
If steel demand and output hold up, then so too should iron ore imports, and thus prices.
It’s too early to say if iron ore imports are weakening amid the tariff concern, with March data compiled by commodity analysts Kpler suggesting a solid, if unspectacular, result.
China imported 102.1 million tons of iron ore in March, up from 84.36 million in February, although that month’s total was lower than expected because of weather disruptions in top supplier Australia.
The March figure was only slightly below the 104.9 million tons from the same month in 2024, according to Kpler data.
In addition to iron ore, the other key steel raw material is metallurgical coal, and it has also shown a somewhat subdued reaction to the escalating tariff war.
Singapore Exchange contracts, which track the price of metallurgical coal from Australia, the world’s biggest exporter of the fuel also called coking coal, have actually risen, gaining 5.9% from the close on April 2 to end at $186 a ton on Monday.
However, the price increase is because of weather-related disruptions in Australia’s Queensland state, home to the bulk of the country’s metallurgical coal mines.
China’s coking coal contracts have slipped 3.1% from April 2 to the close of 971.50 yuan a ton on Monday, perhaps a better reflection of some demand concerns emerging amid the tariff uncertainty.
