FX.co ★ Iron Ore Inches Higher on Tariff Relief

Iron ore futures saw a slight uptick to CNY 710 per tonne after hitting an eight-month low of CNY 698 on May 27th, following news of further tariff relief from the United States. A U.S. Federal court recently blocked reciprocal tariffs imposed by the Trump administration, which had been justified by an unfounded declaration of economic emergency. This move supports manufacturing sectors in major global economies. Despite this, iron ore futures have remained 10% lower for the year due to weak demand for ferrous metals in China.

China has indicated potential restrictions on property developers, preventing them from selling homes before completion, which would eliminate a critical financing avenue for these companies. Such measures could increase financial strain on the debt-laden property sector, potentially leading to large-scale liquidations and removing a crucial source of demand in global steel markets. Furthermore, there is speculation about forthcoming production caps, supported by statements from Baosteel, which suggested that total steel output from mainland China could decrease by 50 million tons this year. This downward trend in prices persists despite efforts to boost consumption, such as interest rate cuts by the People's Bank of China and increased bond issuance.