China’s steel and iron ore prices finished trading up more than 1 percent on Tuesday, with Beijing announcing after the close that it would take countermeasures in response to the latest round of U.S. trade tariffs.
China’s commerce ministry said in a statement that it had “no choice but to retaliate” to the latest move from Washington, but did not offer details on possible measures.
U.S. President Donald Trump on Monday said he had decided to impose 10 percent tariffs on about $200 billion worth of Chinese imports which would be effective on Sept. 24, another step in the festering trade conflict between the two nations.
“The direct impact of the trade spat on ferrous markets is minor as China doesn’t sell much (in the way of) steel products to the United States. But people are waiting to see if macro-economic policy will shift,” said a Shanghai-based trader. He declined to be identified as he was not authorised to speak with media.
Benchmark Shanghai rebar futures had climbed 1.4 percent to 4,167 yuan($607.47) a tonne when the market closed at 0700 GMT, their highest level in a week.
The most-active iron ore contract on the Dalian Commodity Exchange closed up 1 percent at 506.5 yuan($73.83) a tonne. It earlier touched its strongest since Aug. 21 at 508 yuan.
Meanwhile, macroeconomic and industry research firm Fitch Solutions maintained its forecast that Chinese iron ore prices would average $60 per tonne in 2018 despite a price-rally in August, saying prices would likely decline in coming months as Chinese economic growth refocuses away from heavy industry to services.
Investment data indicates a further loss of economic momentum. Fixed-asset investment growth slowed to 5.3 percent in January-August, curbed by slowing infrastructure growth, while real estate investment also moderated amid tight controls from the central government.
However, the trader said prices would be supported by growing liquidity in China.
“Investors expect a cut in banks’ reserve requirement ratio (RRR), which would bolster liquidity in the market and drive up prices across commodities,” he said.
RRR is the amount of cash that some banks must hold as reserves. The latest reserve reduction took place in June.
Other steelmaking raw materials also edged up on Tuesday. Coking coal prices climbed 0.1 percent to 1,298 yuan a tonne, while coke futures gained 0.6 percent to 2,292 yuan.