**Iron Ore Futures Decline Amid Trade Tensions and Weak Demand**
By Michele Pek
SINGAPORE (Reuters) – Iron ore futures have experienced a continued decline, marking the third consecutive session of losses, primarily due to a dismal outlook for Chinese steel exports and escalating trade tensions between the U.S. and China, the world’s largest consumer of steel.
The Dalian Commodity Exchange (DCE) reported that the most-active May iron ore contract closed down by 0.98%, settling at 812 yuan per metric ton (approximately $111.86). This marks a notable drop, with the contract earlier hitting a low of 803 yuan, the lowest it has been since February 18.
In parallel, the benchmark March iron ore on the Singapore Exchange saw a slight decline of 0.22%, trading at $105.80 a ton as of 0708 GMT.
The geopolitical landscape has shifted significantly following U.S. President Donald Trump’s recent memorandum aimed at tightening restrictions on Chinese investments in strategic sectors, contributing to a weak performance in Chinese equities observed on Tuesday.
Concerns have mounted over China’s direct steel exports due to recent anti-dumping measures put in place by Vietnam and South Korea. Vietnamese authorities declared a temporary anti-dumping levy on several steel products from China, while South Korea has introduced provisional tariffs on imports of Chinese steel plates, further compressing the supply chain and affecting pricing.
Despite these challenges, there are signs of increased raw material demand as steel mills have resumed production. According to Chinese consultancy Hexun Futures, daily crude steel output from major enterprises rose by 0.8% month-on-month to reach 2.151 million tons, with daily average steel production increasing by 4.2% to 2.037 million tons.
In domestic trading, most steel benchmarks on the Shanghai Futures Exchange showed positive movement, with rebar prices gaining 1.24%, hot-rolled coils up by 1.18%, and wire rod prices rising by 0.57%. However, stainless steel experienced a slight dip, falling by 0.3%.
Market analysts from Citi have pointed out that expectations are rising for a new round of government-mandated capacity reductions in China, which may impact production rates and market dynamics in the coming months.
In addition to iron ore, other key steelmaking inputs on the DCE also experienced marginal losses, with coking coal down 0.55% and coke falling 0.95%.
### Implications for Forex Traders:
Forex traders should remain vigilant about the developments in the commodities market, particularly concerning iron ore, as these fluctuations can influence currency values and trading strategies. The ongoing trade tensions between the U.S. and China, along with domestic economic indicators from China, can heavily impact forex pairs involving the Australian dollar (AUD) and the Chinese yuan (CNY), among others.
Monitor key economic releases and trade policy announcements closely to navigate potential volatility in the forex markets during this period of uncertainty.
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