Iron Ore Climbs on PBOC Reserve Cut, US-China Trade Talks
(Bloomberg) — Copper fell and iron ore pared gains after China delivered long-awaited rate cuts to shield the top metals-consuming nation from the impact of US tariffs.
Industrial metals have been rattled by US President Donald Trump’s aggressive trade policy since he took office in January. Meanwhile, China has been boosting stimulus to support the world’s second-largest economy in the face of the ongoing trade war.
On Wednesday, the People’s Bank of China cut the seven-day reverse repurchase rate to 1.4% from 1.5%. It will also trim the reserve requirement ratio by half a percentage point. The announcement came hours after China revealed it would hold its first trade talks this weekend with US officials since Trump unleashed a 145% tariff on most Chinese goods.
“The cuts are within expectations, there is no more beyond that,” said Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Management Co.
Investors are also focused on Wednesday’s interest rate decision by the US Federal Reserve, with traders expecting policymakers to hold.
Copper fell 0.8% to $9,465.50 a ton on the London Metal Exchange as of 9:52 a.m. in London, snapping three days of gains. Aluminum declined 1.2%.
Iron ore prices have taken a hit over the last few months as tariff turmoil has hurt macroeconomic sentiment at a time when demand for the product in China has been slowing. The market is also bracing for a looming oversupply problem, with analysts predicting prices could drop as low as $80 a ton toward the end of the year.
Futures in Singapore rose 0.8% to $98.30 a ton, after climbing as much as 2.4% earlier.
–With assistance from Julian Luk.
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