MARKET OVERVIEW - Iron Ore Drops as EU Tariff Hike Concerns Weigh Heavily on China's Financial Stimulus Optimism

Iron ore prices fell as concerns over steel demand in China outweighed expectations for more fiscal stimulus from Beijing following the European Union's decision to increase tariffs on Chinese electric vehicles. The January iron ore contract on the Dalian Commodity Exchange (DCE) finished the morning session down 0.7% at 777 yuan/ton ($108.88).

The benchmark December iron ore on the Singapore Exchange dropped 1.3% to $102.6/ton at 06:51 GMT. The EU decided to increase tariffs on Chinese-made electric vehicles up to 45.3% at the end of its highest-profile trade investigation, which could heighten export concerns and pressure domestic steel consumption in the future.

Continued confidence in expectations for more fiscal stimulus had lifted prices overnight and at the start of the session. Reports suggest that China is considering approving over 10 trillion yuan in extra debt issuance over the next few years to revive its fragile economy.

Coking coal and coke prices on the DCE declined by 1.72% and 0.58%, respectively. At the Shanghai Futures Exchange, rebar fell by 0.47%, hot-rolled coil by 0.67%, and stainless steel by 0.88%, while wire rod gained 0.7%. Analysts expressed expectations for a slowdown in steel production growth due to narrowing margins and environmental warnings in some northern regions.