Chinese steel futures shed more than 6 per cent on Friday and hit their lowest in more than eight months amid escalating trade tensions between the United States and China while iron ore fell to levels unseen in nearly nine months.
U.S. President Donald Trump signed a presidential memorandum on Thursday targeting up to $60 billion in Chinese goods including steel with tariffs, but only after a 30-day consultation period that starts once a list is published.
China also unveiled plans to impose tariffs on up to $3 billion of U.S. imports in retaliation against U.S. move.
“The prospects of trade war between U.S. and China has driven a systematic selloff in commodities. The market is in panic,” said Zhou Tao, an analyst with Citic Futures in Shanghai.
Weak steel demand has also helped accelerate the fall, Zhou added.
Traders built up stocks ahead of the Lunar New Year holiday betting that steel demand will pick up in March. However, a slow pickup in demand raised concerns that steel traders are likely to sell off their stocks to boost liquidity.
Rebar inventories held by traders in big cities rose to 9.79 million tonnes by March 16, the highest since April 2013, data from industry consultancy Steelhome showed.
The most active rebar on the Shanghai Futures Exchange dropped more than 6 per cent to a low of 3,379 yuan ($533.66) a tonne in early trade, its lowest since July 11, 2017, and was on track for a weekly fall of more than 8 percent.
It was trading at 3,428 yuan a tonne, down 5.4 per cent, by GMT 0235.
Iron ore on the Dalian Commodity Exchange also fell more than 6 per cent to 436 yuan a tonne, its lowest since late June, 2017.
Coke and coking coal fell more than 5 per cent to 1,859 yuan a tonne and 1,217.5 yuan a tonne, respectively, in early trade.
Iron ore for delivery to China’s Qingdao port; eased 7 cents at $67.18 a tonne on Thursday, according to Metal Bulletin. ($1 = 6.3317 Chinese yuan renminbi)