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| Iron Ore |
Steel Demand and Market Optimism Drive Bullish Momentum in 2025
China’s Steel Production Outlook Supports Iron Ore Stability
Iron ore prices defied bearish expectations in early May 2025, surging sharply after the United States and China announced a 90-day pause in tariff increases. This countered earlier assumptions that the trade truce would mirror gold’s downturn. Instead, iron ore futures jumped over 7% on China’s Dalian Commodity Exchange (DCE), signaling market resilience and renewed steel demand optimism.
Iron Ore Futures Rally as Trade Pressures Ease
The September DCE contract soared 7.185% to US $99.2 per ton, a dramatic reversal from the 2% dip recorded on May 8. That earlier decline reflected trade tensions and subdued demand in China. However, the tariff relief between the U.S. and China shifted market dynamics overnight.
Coke and coking coal also posted moderate gains, while rebar, hot-rolled coil (HRC), and wire rod futures on the Shanghai Futures Exchange all climbed over 1.3%. Stainless steel futures edged up 1.34% to US $1,781 per ton, reinforcing the broader uptrend in steel-linked commodities.
Tariff Pause: A Catalyst for Bullish Sentiment
The U.S. will reduce tariffs on Chinese goods from 145% to 30%, while China cuts duties from 125% to 10%. This mutual rollback improved market sentiment and fostered speculative activity on the DCE, even as steel mills adopted a cautious procurement stance.
The iron ore rally contrasts with gold futures, which dropped 3.75% as investors embraced risk-on trades. Iron ore’s divergence highlights its unique position in global supply chains, especially given China’s status as the world’s largest steel producer.
Iron Ore's Stability Amid Global Volatility
Unlike many commodities, iron ore has traded within a narrow band since late 2024. Prices ranged between US $96.20 and $110.55 per ton, showing resilience despite macroeconomic headwinds. As of May 2025, iron ore futures on the Singapore Exchange stood at US $99.35, rebounding from a seven-month low.
First-quarter 2025 import data reflects nuanced demand trends. China imported 285.31 million tons, down 7.8% year-on-year, largely due to supply disruptions in Australia. However, April’s preliminary data from Kpler shows a recovery to 101.4 million tons, up from 93.97 million in March, indicating a seasonal restocking trend ahead of peak construction.
Steel Output and Investor Confidence Sustain Prices
Analysts attribute the price surge to strong investor sentiment, driven by expectations of higher steel production in China. Lower tariffs reduce input costs for steelmakers, which encourages iron ore purchases to boost output.
In short, the combination of tariff relief, resilient steel demand, and limited supply disruptions is supporting iron ore’s bullish momentum—marking it as a standout performer in a volatile global commodities market.
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