By Michele Pek
SINGAPORE (Reuters) -Iron ore futures faltered on Wednesday, pressured by tit-for-tat tariffs between the United States and top metals consumer China, outweighing optimism about improved demand for Chinese steel.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) closed 1.34% lower to 771 yuan ($106.18) a metric ton.
The benchmark April iron ore on the Singapore Exchange was down 1.42% at $99.4 a ton, as of 0705 GMT.
U.S. President Donald Trump’s doubling of duties on Chinese goods to 20% took effect on Tuesday, prompting swift retaliation from Beijing and spurring trade war concerns.
Beijing hiked import levies covering $21 billion worth of American agricultural and food products, and suspended the soybean import licenses of three U.S. firms and halted log imports.
«Sentiment was also impacted by the prospect of further tariffs,» ANZ analysts said.
U.S. tariffs on steel and aluminium are due to kick in on March 12.
China unlocked more fiscal stimulus on Wednesday, promising greater efforts to support consumption and cushion the impact of an escalating trade war with the United States, with specific measures including a significant expansion in Beijing’s trade-in scheme launched last year.
China said it would restructure its giant steel industry through output cuts, although it did not announce any target in its most recent intervention to address an overcapacity in the sector.
«Both supply and demand of imported iron ore in China are predicted to strengthen in March, usually a month when steel consumption in the country is robust,» Chinese consultancy Mysteel said.
«This should keep prices of the steelmaking material firm.»
Most steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar dipped 0.7%, hot-rolled coil fell 0.56%, wire rod eased nearly 0.8%, while stainless steel posted a modest gain of 0.38%.
Other steelmaking ingredients on the DCE declined, with coking coal and coke losing 3.32% and 2.66%, respectively.
($1 = 7.2614 Chinese yuan)
(Reporting by Michele Pek; Editing by Sumana Nandy and Sherry Jacob-Phillips)
