MANILA/BEIJING: Prices of commodities from iron ore to rubber tumbled in China on Tuesday, with investor sentiment shaken by an intensifying trade war between Beijing and Washington that could hurt the world's No. 2 economy.
The selloff also hit steel, copper, cotton and palm oil, as Chinese investors returned from Monday's public holiday. Soybeans and soymeal futures, however, rallied after Beijing slapped retaliatory tariffs on soybean imports from the United States.
U.S. President Donald Trump threatened to impose a 10 percent tariff on another $200 billion of Chinese goods, prompting China's commerce ministry to warn that Beijing will take comprehensive measures to "fight back firmly".
The latest tariff threats between the world's two largest economies come after Trump's Friday announcement that he would go ahead with a 25 percent duty on $50 billion in Chinese products, prompting Beijing to respond in kind.
"People are selling off their assets as the trade war escalates, which could affect the whole economy and would be the biggest bearish news since China opened up its doors to the world decades ago," said Henry Chen, trade director at brokerage Fortune Bay Resources in Shanghai.
Prices of construction steel product rebar - among China's most liquid commodity futures markets - and its raw materials were among the hardest hit.
The most actively traded rebar contract for October delivery on the Shanghai Futures Exchange
Iron ore on the Dalian Commodity Exchange
But some analysts say that the tit-for-tat trade war will not cause much disruption in China's steel market, the world's biggest.
"Chinese steel prices are mainly decided by domestic demand and the impact of the trade dispute will be limited," analysts at CITIC Futures wrote in a note.
Elsewhere, Shanghai rubber
The selloff spread to cotton
Dalian soymeal futures
China buys around a third of its soybeans from the United States to crush into meal for pig and poultry feed. - Reuters
Already a subscriber? Log in.
Limited time offer:
Cancel anytime. No ads. Auto-renewal. Unlimited access to the web and app. Personalised features. Members rewards.
Follow us on our official WhatsApp channel for breaking news alerts and key updates!