Iron ore dips on US tariffs, but resilient steel demand caps losses

By Michele Pek

SINGAPORE, April 3 (Reuters) - Iron ore futures inched lower on Thursday after U.S. President Donald Trump unveiled a broad set of reciprocal tariffs, although seasonal demand for the steelmaking ingredient helped cushion the downward trend.

The most-traded May iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 0.32% lower at 788.5 yuan ($108.05) a metric ton.

The benchmark May iron ore SZZFK5 on the Singapore Exchange was 0.84% lower at $101.95 a ton, as of 0707 GMT.

U.S. tariffs were more aggressive than expected and that will weigh on ferrous markets, broker Galaxy Futures said in a note.

Trump on Wednesday revealed a 10% minimum tariff on most goods imported to the United States, with much higher duties on products from dozens of countries, worsening a trade war that threatens to drive up inflation and stall U.S. and worldwide economic growth.

Chinese imports will be hit with a 34% tariff, bringing the total new levy to 54%.

Beijing on Thursday urged the United States to immediately cancel its latest tariffs and vowed countermeasures to safeguard its own interests.

Still, steelmakers have ramped up production during the peak construction season in March and April, cushioning the fall in prices.

"The demand for imported iron ore in China is expected to remain strong in April, as the recovery of steel consumption ... will encourage steelmakers to lift their hot metal output further," said consultancy Mysteel in a note.

On the supply side, iron ore exports are down 17% year-on-year in the current Australian cyclone season, said ANZ analysts.

Other steelmaking ingredients on the DCE languished, with coking coal DJMcv1 and coke DCJcv1 down 0.2% and 0.64%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange posted losses. Rebar SRBcv1 eased 0.19%, hot-rolled coil SHHCcv1 weakened 0.63%, stainless steel SHSScv1 fell 0.92%, while wire rod SWRcv1 inched up nearly 0.4%.

China's financial markets will be closed on Friday for a public holiday. Trading will resume on Monday, April 7.

($1 = 7.2975 Chinese yuan)