Selloff in iron ore. rubber, palm oil, copper in China as US trade war widens

The three countries will also push ahead with greater domestic consumption of the commodity, according to the Bangkok-based International Rubber Consortium Ltd (IRCo).

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 closed down 2.9 percent at 3,769 yuan ($583) a tonne, after hitting a 9-1/2-month high on Friday. Hot rolled coil also fell 2.9 percent.

Iron ore on the Dalian Commodity Exchange slid 4.6 percent to 450.50 yuan per tonne. Coking coal lost 4 percent to 1,199.50 yuan, and coke dropped 4.1 percent to 2,086 yuan.

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 fell as much as 7 percent to a record low of 10,050 yuan. Copper dropped 3.4 percent and aluminium slid 2.8 percent.

The selloff spread to cotton and palm oil which both slumped by 5 percent.

Dalian soymeal futures climbed 3.6 percent to settle at 3,054 yuan a tonne after China imposed a 25 percent duty on U.S. soybean imports. Soybean rose 2 percent.

China buys around a third of its soybeans from the United States to crush into meal for pig and poultry feed. - Reuters