China/US trade war affects rubber and other commodity prices

Rubber_treesPrices of commodities from iron ore to rubber took a tumble in China, with investor sentiments shaken by the import duties imposed by both countries, amidst intensifying trade war between Beijing and Washington that could hurt the world’s second largest economy.

The selloff also hit steel, copper, cotton and palm oil. Soybeans and soymeal futures, however, rallied after Beijing slapped retaliatory tariffs on soybean imports from the US.

US President Donald Trump threatened to impose a 10% tariff on another US$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 recent announcement to slap a further 25% duty on US$50 billion in Chinese products, prompting Beijing to respond in a tit-for-tat situation.

With the escalating trade war between both countries, it could affect the world economy. Prices of construction steel product rebar – among China’s most liquid commodity futures markets – and its raw materials were among the hardest hit.

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.