Iron Ore Prices Hit Six-Week Low Amid Escalating U.S.-China Trade Tensions

Iron ore tumbles as trade tensions between the U.S. and China deepen, overshadowing China's manufacturing rebound.

Editorial Team (ET)July 15, 2025

Iron ore futures plunged for the sixth consecutive session on Monday as escalating trade tensions between the United States and China rattled global commodity markets. Despite encouraging Chinese manufacturing data, the fear of new tariffs and potential production cuts in China weighed heavily on investor sentiment.

The most-traded May iron ore contract on China's Dalian Commodity Exchange (DCE) dropped 2.81%, settling at 779.5 yuan ($106.91) per metric ton. Earlier in the session, prices fell to 777.5 yuan, marking the lowest level since January 14. Similarly, the benchmark April iron ore contract on the Singapore Exchange declined by 2.53% to $99.85 per ton.

Trade War Fears Drive Market Volatility

The renewed slide in iron ore prices comes after U.S. Treasury Secretary Scott Bessent revealed that Mexico has proposed aligning its tariffs with Washington’s latest trade measures. U.S. President Donald Trump recently announced a 10% tariff on Chinese imports, alongside a sweeping 25% levy on all steel and aluminum imports, set to take effect on March 4.

These aggressive trade policies have sparked fresh concerns about Chinese demand for raw materials, including iron ore. With China being the world’s largest steel producer, any disruption in supply chains or added costs from tariffs could lead to reduced import volumes, further pressuring prices.

China's Steel Production Cutbacks Add to Bearish Outlook

Adding to the downside pressure, market speculation has resurfaced over China's possible move to cut crude steel output by 50 million tons in 2025. The Chinese government has previously intervened in steel production to curb emissions and stabilize domestic prices. However, neither China’s state planner nor the China Iron and Steel Association has confirmed these reports.

A reduction in steel output would inevitably lower demand for iron ore, reinforcing the downward trend in prices. This uncertainty has led investors to adopt a cautious stance, dampening market confidence.

Mixed Signals from China's Manufacturing Sector

Despite the negative market sentiment, China’s manufacturing sector showed signs of resilience. A private-sector survey released on Monday indicated that factory activity expanded at a faster pace in February, bolstered by stronger supply and demand, as well as a rebound in export orders.

This trend aligns with China’s official Purchasing Managers’ Index (PMI) data, which revealed the fastest manufacturing expansion in three months. Analysts view this as a sign that Beijing’s economic stimulus measures are gradually gaining traction, offering a potential cushion against the broader global slowdown.

Steelmaking Materials Show Mixed Performance

While iron ore prices declined, other key steelmaking ingredients showed signs of resilience. On the Dalian Commodity Exchange, coking coal and coke gained 0.96% and 0.24%, respectively. However, steel futures on the Shanghai Futures Exchange remained largely stagnant, with rebar dipping 0.66%, wire rod losing 0.1%, and hot-rolled coil trading flat.

Looking Ahead: Will Iron Ore Recover?

With U.S.-China trade tensions escalating and China’s steel production policy in flux, iron ore prices remain under significant pressure. Investors will be closely monitoring upcoming policy announcements and global trade developments to gauge the market’s next move.

As the world’s largest steel consumer, China’s economic health remains a crucial factor for iron ore’s outlook. If manufacturing activity continues to strengthen, it may provide some support for prices. However, if geopolitical tensions escalate further, the bearish trend could persist, keeping iron ore in a volatile trading range.

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