Chinese steel and iron ore futures dropped to one-week lows on Tuesday as investors cut positions after returning from a holiday weekend with the United States and China locked in an intensifying trade war.
Washington and Beijing imposed fresh tariffs on each other’s goods on Monday as the world’s biggest economies showed no signs of backing down from an increasingly bitter trade dispute that is expected to hit global economic growth.
The most actively traded January rebar on the Shanghai Futures Exchange closed down 1.8 percent at 4,060 yuan ($592) a tonne, not far from the session’s low of 4,052 yuan, its weakest since Sept. 14. January iron ore on the Dalian Commodity Exchange dropped 1 percent to settle at 497 yuan per tonne. Earlier in the session, the contract touched 494 yuan, its lowest since Sept. 13. Chinese markets were shut on Monday for a public holiday.
China has said it was willing to restart trade negotiations with the United States only if the talks are “based on mutual respect and equality,” the official Xinhua news agency said, citing a white paper on the bilateral trade dispute published by China’s State Council.
“The sharp criticism suggests that China might prefer to wait out the current U.S. administration, rather than embarking on potentially futile negotiations,” Mizuho Bank said in a note to clients. “Given these developments, it is increasingly likely that both sides will not resume negotiations for some time, at least until there is a noticeable shift in the political mood on either side.”
Liu Zhenjiang, president, China Iron and Steel Association, said last week he expects China’s steel demand to remain firm, supported by infrastructure demand, despite the escalating Sino-U.S. trade dispute, adding that any efforts by Washington to “sabotage” the Chinese economy will not succeed.
China’s upcoming industrial production curbs on its northern region for the second winter in a row are also expected to keep steel supply tight and support prices, traders said.
Coking coal futures slipped 0.2 percent to 1,277.50 yuan a tonne and coke slid 1.4 percent to 2,316 yuan.
Yaang Pipe Industry Co., Limited (www.yaang.com)