In April, iron ore futures in China dipped below CNY 690 per tonne, marking their lowest level in nearly seven months. This decline was primarily attributed to the intensifying trade tensions between the United States and China, which negatively impacted the demand forecast for ferrous metals. Following the United States' imposition of a cumulative 104% tariff on Chinese goods, China retaliated by raising tariffs on U.S. goods to 84%. Although these U.S. tariffs partially exclude steel, and the exchange of ferrous metals between the two nations constitutes only a small portion of the global market, apprehensions arose that reduced trade activity could adversely affect their respective economies, subsequently impacting global iron ore purchasing trends.
However, it is important to note that the tariff impact on Chinese steel was comparatively less severe than that on base metals. This was largely due to economic stimulus measures from Beijing aimed at bolstering household consumption and sustaining property developers' financial stability. Supporting this outlook, China's construction Purchasing Managers' Index (PMI) surged to a 10-month peak in March, coinciding with a significant expansion in manufacturing activity.
