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 fall.

The most-traded May iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 was down 0.2% at 789.5 yuan ($108.12) a metric ton, as of 0240 GMT.

The benchmark May iron ore SZZFK5 on the Singapore Exchange was 0.79% lower at $102 a ton.

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.

"Spot buying at ports in China is said to be brisk as construction activity picks up," said ANZ analysts, adding that manufacturers are more confident in the downstream demand for steel.

"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.

Other steelmaking ingredients on the DCE languished, with coking coal DJMcv1 and coke DCJcv1 down 0.6% and 0.31%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange posted losses. Rebar SRBcv1 eased 0.03%, hot-rolled coil SHHCcv1 weakened 0.33%, stainless steel SHSScv1 fell 1%, while wire rod SWRcv1 inched up 0.24%.

($1 = 7.3018 yuan)