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Highlights
- Iron ore prices hit a five-week high amid rising steelmaking demand.
- Base metals remain subdued due to trade tension fears.
- US tariff talks reignite concerns over global trade stability.
Iron ore extended its rally while base metals showed mixed performance as the global market digested tariff-related developments announced by the US administration.
US President Donald Trump, on his first day back in power, signaled potential import tariffs of up to 25% on goods from Mexico and Canada, with an expected implementation date of February 1. Although Trump refrained from imposing similar levies on China, the renewed focus on trade disputes pushed the US dollar higher, creating additional hurdles for base metal markets. A stronger dollar often makes dollar-denominated metals more expensive for global buyers, dampening demand.
The industrial metal copper saw continued pressure as broader concerns around trade weighed heavily. Copper prices fell by 11% in the last quarter, underlining concerns about weak global demand and an uneven recovery in China’s economy.
On the London Metal Exchange (LME), base metals exhibited subdued activity during early trading hours. Lead edged nearly 1% lower, while aluminum remained stable at $2,691.50 per tonne as of 11:17 am Shanghai time. Sentiment around metals was notably cautious, reflecting apprehensions about market volatility as tariff-related news unfolded.
In contrast, iron ore demonstrated a more positive trajectory, supported by steady demand from China, which heavily relies on the material for steelmaking. Futures climbed by as much as 1.3%, reaching $105.15 per tonne, the highest level since December 17. This uptick reflects optimism in China's infrastructure growth and industrial recovery, despite ongoing concerns about its broader economic momentum.
Companies linked to iron ore mining and steel production, such as BHP Group (ASX:BHP) and Rio Tinto (ASX:RIO), remain focal points for investors as demand trends continue to evolve. While the base metal markets face ongoing uncertainties stemming from both geopolitical developments and currency fluctuations, the robust performance of iron ore highlights the varying impact of macroeconomic forces on different commodity segments.
As markets closely monitor tariff developments and their potential impact on global trade, the divergent paths of iron ore and base metals exemplify how key industrial commodities react to shifting economic scenarios. Moving forward, the interplay between trade policies and industrial demand is expected to shape the trajectory of global commodity markets.
