Iron ore futures jump on U.S. China trade deal optimism

Iron ore futures jumped on Wednesday, driven by positive market sentiment following a significant easing of trade tensions between the United States and China earlier this week.

Beijing and Washington announced major tariff rollbacks. The move comes after President Trump revealed a broad trade agreement with China, reducing import duties on all Chinese goods from a steep 145pct to 30pct. In response, China slashed tariffs on U.S. imports from 125pct to 10pct. These tariff reductions will remain in place for 90 days while the two economic superpowers work toward a longer-term deal.

Adding to the bullish momentum, Reuters reported that Shougang Hierro Peru, a Chinese-owned miner, suspended operations after a telecoms collapse at its port. With repairs expected to take 4-5 months, parent company Shougang Group is likely to boost spot market purchases to sustain production.

Despite the near-term optimism, the long-term outlook for iron ore demand remains uncertain. Analysts caution that possible steel production curbs in China and declining steel exports, amid increasing global protectionism, could weigh on future demand. Additionally, seasonal factors such as a slowdown in summer construction activity may also dampen steel consumption.

On the Dalian Commodity Exchange, the most actively traded September iron ore contract rose 2.43pct to 737 yuan (USD 102.3) per ton. Coke and coking coal futures also posted gains, rising 1.58pct and 2.11pct, respectively, to close at 1,482 yuan (USD 206) and 894.5 yuan (USD 124) per ton.

Meanwhile, on the Shanghai Futures Exchange, rebar and HRC futures climbed over 1.2pct, reaching 3,127 yuan (USD 434) and 3,267 yuan (USD 454) per ton. Wire rod prices increased 0.58pct to 3,453 yuan (USD 479), while stainless steel futures rose 1.16pct to 13,080 yuan (USD 1,816) per ton.

1 USD / 7.2 yuan