Iron ore prices have seen some degree of volatility in the last fortnight or so. Experts attribute the moves to a combination of factors, the most critical being the imposition of tariffs on certain Chinese steel products, including those distributed through neighboring Vietnam. Another significant factor is changes in demand from major steel-making countries. Whatever the case, global markets seem somewhat uneasy about what the rest of 2025 might hold.
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Vietnam and South Korean Impose Duties on China
Still reeling from the fresh 25% tariff on all steel imports imposed by the U.S., China now faces a “double whammy” in the form of increased levies by Vietnam and South Korea. This comes as the former recently announced a temporary anti-dumping levy of between 19.38% and 27.83% on hot-rolled coil steel products from China.
Meanwhile, South Korea imposed provisional anti-dumping duties of between 27.91% and 38.02% on Chinese thick steel plates mainly used in manufacturing large ships. Reports indicate that the decision resulted from a preliminary probe by the country’s Ministry of Trade, Industry and Energy. According to the latest, Vietnam’s duty will commence on March 7, 2025, and will last for a period of 120 days.
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U.S. Trade Barriers, Iron Ore Supply Causing Headaches for Chinese Steel
Despite all this, China’s could be in for even more bad news on the steel export front. According to a Reuters report, a bipartisan group of lawmakers in the U.S. plans to introduce a bill to thwart cheap steel imports by China-supported companies based in other countries, that often attempt to bypass U.S. levies. If passed, the legislation will serve to toughen anti-dumping rules.
The ongoing fluctuations in iron ore future prices also stemmed from contradictory signals emanating from global steel markets. Indeed, there has been a degree of variance in ore supply and demand, which has kept iron ore prices locked in a “one step forward, two steps back” pattern.
For instance, a drop in ore mining activity and adverse weather conditions in Australia continue to reduce iron ore shipments. Experts had also predicted an increase in ore consumption due to increased construction activities in China following the end of the Lunar New Year, which had previously excited market players.
Iron Ore Prices Fluctuate in Mid-February
Towards the end of last week, iron ore prices saw a four-day dream run on some of the major commodities exchanges. However, the streak snapped when markets re-opened this Monday. For example, on China’s Dalian Commodity Exchange (DCE), the most-traded May contract ended 0.77% lower at approximately US $114.95 (832.5 yuan) a metric ton.
Things were not very different on the Singapore Exchange. While the fall on February 24 was limited because of decreasing iron ore inventories in Chinese ports, it still continued on Tuesday. Once again, the new tariffs, the probable new duties on the way and the very slight recovery in ore shipments seemed to dampen investor sentiments.
Iron Ore Market Dynamics
Both Vietnam and South Korea have fledgling steel industries that have been growing in recent years. Vietnam is still a major importer of steel from China, but like South Korea, it is now compelled to protect its domestic steel industry by enacting new tariff rules.
In fact, low-priced Chinese steel has been the bugbear of many local markets around the world, including India, where unlike in China, infrastructure continues to grow at a steady pace. Following America’s lead, many countries have either already imposed additional levies on Chinese steel or are in the process of doing so.
2025 Does Not Hold a Bright Future for Iron Ore
This tug-of-war between China-supported steel mills and domestic markets of various nations has caused significant fallout in the iron ore sector. Mining majors like Rio Tinto, Australia’s Fortescue Ltd and Brazil’s Vale SA, who each benefited from the bullish Chinese demand for iron ore, have also started feeling the negative impact of a weak Chinese economy.
A report by Bloomberg indicates that leading global mining companies posted weaker quarterly profits and revenue falls in the last few days, with those most exposed to iron ore seeing the greatest impacts. The report pointed out that among all commodities, iron ore’s performance was the worst in 2024.
Overall, the iron ore lost at least a quarter of its value last year due to fluctuating demand, while benchmark futures fell about 7% from 2023. Adding to the worsening demand was increased supply from Guinea’s Simandou project and expansions in both Australia and Brazil.
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