Iron Ore and Base Metals Drop as Trump Threatens China Tariffs
Iron ore and base metals extended their decline on Wednesday after US President Donald Trump threatened 10% tariffs on all imports from China, potentially impacting domestic markets and dampening economic recovery prospects.
Singapore iron ore futures plunged 1.3%, while Dalian iron ore contracts and Shanghai steel prices also fell. Prices have moderated 3% this year amid optimism over China's economic recovery and Beijing's potential stimulus measures.
Trump's announcement follows a previous threat to impose 25% tariffs on Mexico and Canada, which has already led to a decline in base metal prices on the London Metal Exchange (LME).
Copper on the LME shed 0.5% to $9,235 per ton, Aluminum, nickel, and zinc also recorded losses.
The president's tariff threats stem from concerns over China's alleged involvement in providing fentanyl to North America. While the US is not a major importer of Chinese steel, the tariffs could indirectly impact the domestic market.
Iron ore prices had slumped over 25% in 2024 due to China's economic woes and real estate sector crisis. However, prices have rebounded slightly this year on positive economic indicators and expectations of government stimulus.