Iron ore prices have been decreasing amid the US-China tariff war despite a recovery in demand

Iron ore prices in China have dropped recently as ongoing U.S.-China trade tensions and economic uncertainty continue to unsettle commodity markets. On the Dalian Commodity Exchange, the September iron ore contract slid by 5.8%. Futures traded on the Singapore Exchange followed a similar path, dipping 5.6% to $96.1 per ton.

The decline comes despite solid short-term demand signals, with Chinese hot metal output reaching its highest level in over a year. However, these fundamentals have taken a backseat to investor anxiety over geopolitical risks.

The latest round of tariff escalations, marked by sharp import duty hikes from Washington and tit-for-tat responses from Beijing, has raised concerns about slowing global trade and its impact on industrial production.

There was some speculation that stimulus measures from Chinese policymakers might lend support to the market, but so far, such optimism has not reversed the broader downtrend. The steel sector also showed signs of strain. Coking coal and coke prices weakened on the DCE, while finished steel products presented a mixed picture—hot-rolled coil and stainless steel prices edged lower, whereas rebar prices remained largely unchanged.

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Unless tensions between Washington and Beijing ease or domestic economic signals improve, traders are likely to remain cautious. Market watchers expect further volatility, especially if industrial demand shows signs of fatigue or broader macroeconomic indicators worsen.