Join our daily newsletter At The Bell to receive exclusive market insights
On the back of Trump’s latest – and frankly absurd – threats to hit China with 104% tariffs, the price of iron ore has tumbled, currently worth US$92.80/tonne in Singapore at 1.5pm AEST.
That’s officially a YTD low for what is the key economic pillar of Australia’s export economy.
The thinking goes that China, now dealing with the economic impacts of tariffs – both those imposed upon it by the USA, and, those it imposed itself on the USA in retaliation – will take some steam out of China’s already-struggling property and construction sectors, culminating in less demand for iron ore.
Iron ore, is of course, the major lifeblood of the Australian economy. It effectively commands the price of our currency, given the AUD is viewed in forex houses around the world as a bellwether of the Chinese economy.
As such, this decline in iron ore prices stands far more likely to hurt Australians than anything Trump could do to Australia tariff wife, given our relatively small trading partnership with America (when, at least, compared to China.)
The price of iron ore is going down with a basket of other hard commodities as investors try to make sense of current market chaos but arrive on the conclusion that in the short term, demand for commodities is likely to suffer as economies now enter mini (or not so mini) tariff-borne winters.
And it’s been bad news for a number of well known names on the stock exchange, including the ASX’s second largest company, BHP.
Just take a look at the following well-known iron players. As of 1.20pm AEST:
- The materials sector is down -3.07%
- BHP Group (BHP) is down -3% to $34.32/sh
- Rio Tinto (RIO) is down -4.1% to $104.96/sh
- Mineral Resources (MIN) is down -10.3% to $14.70/sh
- Fortescue Ltd (FMG) is down -4.5% to $14.15/sh
As for where the markets head from here, who knows.
The big question is for how long China and America can keep ratcheting up the tension. It does seem unlikely the US would impose 104% tariffs on China for the next four years.
Especially considering that, as much as America wants to try and pretend otherwise, de-coupling from China completely without decimating what consumers can buy on the shelves at home is a complete fantasy.
Join the discussion: See what’s trending right now on HotCopper, Australia’s largest stock forum, and be part of the conversations that move the markets.
