Seaborne iron ore prices slid further on Wednesday, reaching the lowest point since 17 November 2017. Fears of a trade war were spreading but in the shorter term iron ore was expected to see some support from steel prices.

The Kallanish index for 62% Fe Australian fines slipped another $0.43/tonne to $63.33/dry metric ton cfr Qingdao. 170,000 tonnes of PB fines sold in tender at $62.75/t with a laycan in 23 April-2 May. On the Dalian Commodity Exchange September iron ore settled at CNY 447/t ($71.1/t), down CNY 10.5/t, while on the Singapore Exchange May 62% Fe futures settled down $1.69/t at $62.24/t.

Steel and iron ore markets may have a bumpy ride regardless of fundamentals if a trade war kicks off between China and the USA. That prospect came closer on Wednesday as the US imposed duties following from its section 301 investigation into intellectual property theft. China then retaliated by releasing a list of product it would propose to put 25% duties on in retaliation.

A full-blown trade war will only follow if tit-for-tat measures keep being take but the latest duties were a marked escalation from the duties on steel and aluminium. Early commentary on the duties noted a different approach between the two sets of duties, both of which cover roughly $50 billion of trade each. US duties were on around 13,000 lines of HS codes, focussing on the total figure of trade to send a message on the Chinese government to take action on IP theft. The Chinese codes, while covering roughly the same volume of trade, contained just 106 tariff lines, suggesting an approach much more focussed on impacting specific sectors. The Chinese tariffs were on soy beans, cars and chemicals.