US President Donald Trump’s plan to impose a new 25% tariff on all steel and aluminum imports to the United States burdened the shares of producers in Asia on Monday because it threatened to disrupt the flow of trade in metals.
Tariffs, what Trump said would be announced on Monday and was an addition to the existing tasks, triggering warnings from steel makers in Asia about the impact on prices, profitability and wider volume and concerns that they could encourage inflation and drag economic activity.
Canada, Brazil, Mexico, South Korea, and Vietnam are the largest steel sellers to the US, according to government data and American steel institutes, while Canada is a dominant supplier of imported aluminum.
In South Korea, the Ministry of Industry said that on Monday an emergency meeting with steel makers in Seoul to discuss steps to minimize the impact of potential tariffs.
“We are worried that potential changes will cause an increase in export prices and reduction of a 70% quota volume,” said an official at the Hyundai Steel 004020, referring to the South Korean annual steel quota of the 70% volume sent to The AS on average from 2015 -17, agreed during the first Trump administration.
The company, which supplies steel to the Hyundai and KIA car factory in the US, has said previously that they were considering building a new steel factory in the US to collect the potential impact of Trump’s potential tariffs.
Baja Hyundai shares fell by 2.9% amid a wider decline among South Korean steel makers.
“The negative impact of tariff changes will not be avoided,” said an official with a steel 460860 pond, noting that the US is a profitable market for it now.
Chu Xinli, an analyst in China Futures, said US demand will be reduced at a higher price and slower steel entrance current, which is used in automatic manufacturing, equipment and construction.
“Those who are ready to flow into the US will be diverted to other countries and regions, such as EU and Asian countries, which will see changes in global steel trade patterns,” Chu said.
The CCNXMetal Indian metal index is the top sectoral decliner on Monday, down about 2.5%.
Threatened demand
The impact of the tariff can be very broad.
“I suspect that US producers should charge a higher price as a result of this 25% tariff. The dependence of imports is high, around 40% -45% for aluminum and 12% -15% for steel, “said Daniel Hynes, a senior commodity strategist at Anz in Sydney.
Iron ore futures falls on Monday because the threat of tariffs triggers risk sentiment despite evidence of demand that restores in Top China buyers, while aluminum rises narrowly on what an analyst says become a concern that supply can tighten.
“One of the impacts of this tariff is a depressed global economic activity,” said Kyle Rodda, senior financial market analyst at Capital.com in Melbourne.
Some countries make cases for exceptions to Trump tariffs.
The Australian Minister of Trade said steel and aluminum exports to the US created “good -paid American work” and were the key to joint defense purposes, because Canberra pressed Washington for tariff exemption.
However, Bluescope Steel BSL Australia’s shares rose to the highest level of more than two months on Monday, supported by the hope that the business would get from the tariff.
Charu Chanana, Head of Investment Strategy in Saxo in Singapore, said that slower demand could fight the impact of potential inflation from tariffs.
“A greater concern is uncertainty and shifting towards a more protectionist world,” he said.
Source: Reuters
