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BlueScope Steel, Australia's steel exporter, gains from potential US tariffs against steel imports
BlueScope Steel shares rose to their highest level in over two months on Monday. This was due to the expectation that its U.S. steel business would benefit from possible tariffs on steel imports. Stocks rose up to 4% at 0234 GMT, reaching their highest level since 2 December 2024. They were among the top gainers in the benchmark S&P/ASX 200 Index which fell 0.4%. Donald Trump, the U.S. president, announced that he will impose new tariffs of 25% on all imports of steel and aluminum into the United States, on top existing metals duties. This is a major step in his trade policy overhaul. According to data from the American Iron and Steel Institute and government, the largest sources of U.S. imports of steel are Canada, Brazil and Mexico. South Korea and Vietnam follow. Jefferies analysts believe that the protectionist measures taken by the U.S. Steel industry will provide a positive impact on domestic steel prices, specifically hot-rolled coils. This is also good news for BlueScope. The company said that they expected the tariffs would reduce BlueScope Australia's business by approximately A$80,000,000 ($50.12,000,000) in the fiscal year 2026, but it should be a positive overall for the firm given its large U.S.-exposure. BlueScope generated the most revenue in North America during fiscal year 2024. The region accounted for 43.9% its total sales. BlueScope's North Star steel plant is located in Ohio. ($1 = 1.5962 Australian dollars)
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Japan's Nikkei flat as market weighs Trump tariff concerns
Investors weighed the risks of tariffs and the losses in all three U.S. indexes that occurred last week, which dragged down investor sentiment. As of 0149 GMT the Nikkei was unchanged at 38,792.60 while the Topix dropped 0.2%. As news spread that U.S. president Donald Trump would announce new 25% tariffs for all U.S. imports of steel and aluminum on Monday, Japanese Steel makers dropped around 1%. Nippon Steel fell 1.6%. The latest threats of tariffs come after Japanese Premier Shigeru Shiba met Trump at his first White House Summit on Friday. Hiroshi Namikoka, T&D Asset Management's chief strategist, says that while the details of the steel tariffs are still unclear, the meeting between Ishiba & Trump went well. When I look at the overall picture, Japan is quite in a good place. Trump has not announced any tariffs that specifically target Japan. He did, however, press Ishiba on closing Japan's annual surplus in trade with Washington. Trump expressed his optimism about this. Ishiba said that Japanese companies can invest in liquefied gas, AI, autos, and steel. Fast Retailing, TDK Corp, and Tokyo Electron are among the heavyweights that have gained. (Reporting and editing by Tom Hogue, Rashmi aich, and Brigid Riley)
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Markets react to Trump’s tariffs on imports of steel and aluminum
Donald Trump, the president of the United States, announced on Sunday that he would impose new tariffs of 25% on all imports of steel and aluminum into the U.S. on top existing metals duties. He said that he would announce reciprocal tariffs either on Tuesday or Wednesday. On Monday, shares of steelmakers in Asia fell mainly except for those that have operations in the United States. The dollar grew and U.S. Treasury rates ticked up. What market participants say: DAMIAN ROONEY, INSTITUTIONAL SALE DIRECTOR, ARCONAUT, PERTH "Trump's tariffs are causing an enormous amount of uncertainty and that is something no one wants! The market is trying to digest Trump's economy and his policies. CHARU CHANANA IS THE CHIEF INVESTMENT STRATEGIST AT SAXO IN SINGAPORE These threats seem legitimate, and Trump has the power to implement them on national security grounds. After the 2018 tariffs, China is not a major steel supplier to the U.S. and therefore the old playbook cannot be used. The impact on countries such as Canada, Mexico and the EU will be greater than that of other countries. The immediate concern may not be inflation as there could also be other effects, such as a slowdown in demand. The greater concern is uncertainty and a shift to a more protective world. TONY SYCAMORE MARKET ANALYST IG SYDNEY "It was a different reaction. The week began much like the last - headlines about tariffs were made, but the response was different. U.S. stock futures were trading higher and even the ASX 200 had a slight bounce off its lows. The Aussie dollar continues to struggle, but I feel that after last week's whipsaw ride, it will be harder to just shoot and then ask questions. DANIEL HYNES SENIOR COMMODITY STRATEGIST ANZ SYDNEY "I think U.S. producers will be forced to pay higher prices due to these 25% tariffs." The country is heavily reliant on imports, relying on aluminium at 40-45% and steel at 12-15%. I suspect that regional pricing will be the first to react. U.S. Prices are likely to be much higher as traders are anxious to secure metals before tariffs are implemented. Reporting by Asia Markets Team; Editing done by Lincoln Feast.
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Australia claims its steel and aluminium exports generate American jobs
The Australian trade minister has said that its aluminium and steel exports to the U.S. are crucial to the shared interests in defence and create "good-paying American jobs". Canberra is pressing Washington to grant an exemption from President Trump's proposed tariffs. Trump announced on Sunday that he would impose new tariffs of 25% on all imports of steel and aluminum into the U.S. on top of metals duties already in place. This is another major step up in his trade policy overhaul. Don Farrell, the Australian Trade Minister, said that Australia was a U.S. security ally and was advocating "free and fair" trade in its meetings with the Trump Administration. This included access to the U.S. steel and aluminum market. In a press release, he stated that "Australian aluminium and steel create thousands of well-paying American jobs and are crucial for our shared defense interests." Farrell has yet to meet his U.S. equivalent who is not confirmed in that role. However, Australian officials have made representations about aluminium and steel for several months in order to obtain a similar exemption of tariffs as it was granted during the former Trump presidency in 2018. On Friday, Defence Minister Richard Marles and his U.S. counterpart Pete Hegseth met in Washington. Australia made its first $500-million payment to boost the production of the U.S. sub industry as part of the AUKUS project. This will see Australia purchase several U.S. nuclear-powered submarines. (Reporting and editing by Kirstyn Needham.
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Profits of South Korean petrochemical companies will plunge by 2024 due to persistent oversupply
The South Korean petrochemical firms LG Chem and Lotte Chemical made losses in 2024. This was due to an oversupply that is expected to continue this year. Meanwhile, trade tensions have dampened global economic prospects, said company executives this week. As a result of the high cost of energy in Europe, and years spent building up capacity in China's top market, petrochemical producers have begun to consolidate in Europe and Asia. Lotte Chemical's results, released on Friday, revealed that the company's operating losses for 2024 increased by 157% from last year to 895 billion won (619.62 million dollars). The company's data shows that this is the biggest decline in operating income since 2011. The financial data before 2011 is not public. The basic materials division of the company, which includes petrochemicals and agrochemicals, reduced its operating losses by approximately 52% from the previous quarter, to 175 billion Korean won. LG Chem's earnings report on Monday showed that the operating profit for 2024 fell by 63.75% compared to the previous year, reaching 916.8 trillion won, its lowest level since 2019. The petrochemicals division of the company posted an operating loss in the fourth quarter of 99 billion won. Both companies pointed to a global oversupply as the main problem facing the petrochemicals sector. On a Monday call, Yang Cheol Ho said that the continued market decline was caused by a surplus of products in Northeast Asia due to continued capacity expansion, and China's slow economic recovery. The oversupply will continue for many years, as new plants are still being built in China and the Middle East. On Friday, a senior executive at Lotte Chemical said: "We expect global demand to remain uncertain and overcapacity will continue. This is especially true under Trump 2.0." U.S. president Donald Trump imposed 10% tariffs for all Chinese imports. This prompted retaliatory duty from China. While both companies acknowledged that the recovery of Chinese demand is slow, they were optimistic about the recovery of demand in this sector's largest consumer. A spokesperson for LG Chem said that "very strong measures are being taken" to try and stimulate consumption. He added that this could lead a gradual recovery of the domestic demand for home appliances in China. A spokesperson for Lotte Chemical said that they are waiting on further announcements by Beijing regarding its stimulus plans for March. Beijing added home appliances to its list of products included in its consumer exchange scheme in January in an attempt to revive the struggling consumer sector. According to the Commerce Ministry, the stimulus program boosted consumption growth last year by more than one percentage point. LG Chem aims to achieve revenues of 26 trillion won by 2025, and will likely maintain capital expenditures at around 2 trillion won. Last year, it cut its capex by about 30% compared to 2023. (1 dollar = 1,444.4300 won). (Reporting and editing by Florence Tan, Jane Merriman and Gabriele Ng)
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Oil prices rise as investors consider new US tariffs
The oil prices rose on Monday as investors considered the latest threat from U.S. president Donald Trump to impose tariffs on all steel imports and aluminium, which could slow down global economic growth. Brent crude futures rose 40 cents or 0.5% to $75.06 per barrel at 0133 GMT, while U.S. West Texas intermediate crude was $71.38 per barrel, up by 38 cents or 0.5%. Last week, the market saw its third consecutive decline on worries about a trade war. Trump announced that he would announce 25% tariffs on steel and aluminum imports to the U.S. on Monday, in yet another major step of his trade policy overhaul. The president announced tariffs against Canada, Mexico, and China a week earlier, but then suspended them the following day for the neighbouring countries. Tony Sycamore is an analyst based in Sydney at IG. He said that investors are ignoring the threat of steel and aluminum tariffs for now due to Trump's temporary retreat last week. He said that the market had realised that tariff headlines would likely continue for the next few weeks and months. There is also a chance they may be reduced or increased in the future. Investors may be coming to the realization that it is not a good idea to react negatively to every negative headline. China's retaliatory duties on certain U.S. imports are set to go into effect on Monday. There is no progress yet between Beijing and Washington. Oil and gas traders want Beijing to waive import duties on U.S. crude oil and liquefied gas. Trump claimed on Sunday that U.S. and Russia are making progress in ending the Ukraine War, but he refused to give details of any communications with Russian President Vladimir Putin. The sanctions imposed by the United States on Russian oil traders on January 10 have disrupted Moscow’s supply to its major clients, China and India. Washington increased pressure on Iran as well last week. The U.S. Treasury issued new sanctions against a few individuals, and on tankers which help ship millions of barrels per year of Iranian crude oil to China.
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Nippon Steel refuses to comment about Trump's opposition to US Steel majority stake
Nippon Steel, a Japanese company, declined to comment Monday on the statement by U.S. president Donald Trump that no one could have a majority share in U.S. Steel's acquisition target. Trump made this comment to reporters aboard Air Force One on Sunday. He said that the U.S. would impose 25% additional tariffs to existing duties on all imports of steel and aluminum. Nippon Steel shares fell by more than 2% during early trading, while the Nikkei index declined only 0.3%. Trump stated on Friday that Nippon Steel’s $14.9 billion offer for U.S. Steel will be an investment, not a purchase. Two people with knowledge of the matter say that the Japanese steelmaker has not withdrawn its offer. Nippon has been pursuing U.S. Steel for over a year. Trump condemned the proposal numerous times before making his more temperate remarks in the Oval Office on Friday with Japanese Prime Minister Shigeru ishiba by his side. The investment was not clear. It is unclear what details the transaction will be. But Trump announced on Friday that he will meet with Nippon Steel's head this week, and would "mediate and arbitrate" the dispute. Ishiba told Nippon TV, after returning from the U.S. on Sunday, that there were legal questions about the distinction between investment and acquisition, as well as the extent of stock ownership. He said that such details will likely be discussed between Trump Nippon Steel. Ishiba stated that the key question is whether Americans feel that U.S. Steel remains an American company. Nippon Steel declined on Monday to make a public statement about Ishiba’s remarks or any management meetings with Trump. The bid by Nippon Steel for U.S. Steel forms a central part of the global expansion strategy of the Japanese company. The bid was blocked by the then-U.S. president Joe Biden last month, citing national safety. Together with U.S. Steel the firm filed several lawsuits to challenge Biden's decisions. Takahiro Mori, vice chairman of Nippon Steel, said last week that the Japanese company has no plans to change its acquisition structure. (Reporting and editing by Yuka Obaashi, Lincoln Feast, Christopher Cushing).
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Taiwan's chip industry faces a future in which China is threatening to take its share?
Taiwan's Powerchip Technology hoped that by entering into a deal in 2015 with the city of Hefei, located in eastern China, to establish a new foundry it would gain better access to the lucrative Chinese market. Nexchip has emerged as one of the biggest competitors in the legacy chip market, after Beijing's call for localisation forced Powerchip into giving up its once lucrative business producing integrated circuits used on Chinese flat panel displays. Nexchip is one of the Chinese foundries that are gaining market share quickly in the $56.3 billion market for so-called mature or legacy node chips, made with 28 nanometres and larger technology. This trend prompted the Biden Administration to launch an investigation and alarms the Taiwanese Industry. By lowering prices and expanding their capacity, these Chinese foundries, including Hua Hong, SMIC and UMC, threaten the dominance that Powerchip, UMC, and Vanguard International have held for so long in the market of chips used in automobiles and display panels. Executives in Taiwan stated that Taiwanese companies are forced to either retreat or pursue more sophisticated and specialized processes. Frank Huang, Chairman of Powerchip Investment Holding, and its listed subsidiary Powerchip Manufacturing Semiconductor Corporation, said that "Mature node foundries such as us must transform, otherwise Chinese price cuts would mess us even further." The company was reorganised in 2019. UMC said that the expansion in capacity worldwide had created "severe" challenges for the industry. It was working with Intel on developing more advanced, smaller chip designs and diversifying beyond traditional chipmaking. Executives in Taiwan say that trade tensions between Washington, DC and Beijing could ease a little bit. They said this as they sought to secure their supply chains by sourcing chips from outside China. The U.S. president Donald Trump has, however, said that he intends to impose tariffs of up to 100% on semiconductors manufactured outside the United States. Vanguard International refused to comment. SMIC, Nexchip, and Huahong declined to comment. Cheaper, more aggressive Taiwan chip executives claim that after the U.S. blocked Chinese foundries from developing high-end chips in recent years, they have doubled down on older technology and undercut their rivals' prices because of Beijing's strong funding and their willingness to accept lower margins. In recent years, Chinese companies have dramatically increased their legacy chip production capacities. TrendForce estimates that in 2024 China will have a 34% share of the global manufacturing capacity for mature nodes, while Taiwan will hold a 44% share. By 2027 China is expected to surpass Taiwan, while South Korea, the U.S. and other countries with low-single-digit share are expected to decrease. SEMI, a consultancy, forecasts that 57 of the 97 new factories starting production in 2023-2025 will be located in China. One executive at a Taiwanese semiconductor designer stated that Chinese foundries have become more aggressive since 2023 in their pitching of business. This person and another one who worked at a different Taiwanese designer chip said that Chinese customers, especially those in consumer-oriented sectors like panels, were increasingly asking Taiwanese designers chip to hire Chinese fabs in order to manufacture the chips. Beijing had called on Chinese companies to localise their supply chains. The sensitive nature of the issue prevented both people from being named. They said that Chinese government-related firms, such as China Mobile, China Telecom and China Mobile, also issued stricter requirements for using China-made component. China Mobile and China Telecommunications Corporation as well as the Ministry of Industry and Information Technology of China did not respond when asked for comments. TRUMP EFFECT Galen Zeng is a senior researcher at the global market intelligence firm IDC. He said that Taiwanese foundries and chip designers were likely to specialize their processes and diversify their products away from legacy chips. However, their profitability will still be affected by Chinese competition on a medium-term basis. Huang, Powerchip's Huang, said that they will reduce their focus on display driver chips and sensor chips which are widely used in China, and instead shift to 3D stacking. This technique integrates logic chips and DRAM memory to improve computing performance while reducing power consumption. With a 19% share, the company is Nexchip's 2nd largest shareholder. However, it does not have an active role in management. Huang stated that "for chips used in China we will not be able do the business...We must exit otherwise there is no way for us to survive." Washington's efforts to slow down China's growth in the chip industry, combined with worsening relations between Beijing & other countries, could provide some respite. Huang said that some orders that were originally going to China are now being sent to Taiwan and that this trend is expected to continue. A chip design company executive in Taiwan who spoke under condition of anonymity due to the sensitive nature of the situation said that they have received more orders since 2023 from international clients asking them to manufacture chips outside of China. The executive explained that some customers would tell him they didn't care if we taped out the chips in China. They don't like to see "Made in China" on the packaging.
Product streams at danger needs to Trump trigger tit-for-tat trade war: Russell
Much of the debate surrounding the ramifications of a possible second U.S. presidential term for Republican politician Donald Trump has concentrated on what may take place to the U.S. and global economies.
Trump's plan to enforce tariffs of 10% on essentially all imports into the United States, and as much as 50% on those from top trading partner China, have actually raised the spectre of greater inflation and interest rates, and a less competitive market.
However for commodities, the bigger threat of a Trump go back to the White Home is the reaction the remainder of the world is likely to have to the imposition of U.S. trade tariffs.
Political leaders around the world will be unable to sit idly by if Trump locations barriers on their exports to the United States.
Any unilateral action by Trump is therefore likely to be met by retaliation from U.S. trading partners, even if they are erstwhile political allies, such as countries in Europe and some in Asia, such as Japan, South Korea and even India.
If it's unavoidable that U.S. trading partners react to Trump's proposed actions by putting tariffs on imports from the United States, the main question is then what type will they take?
While significant U.S. exporting business such as plane maker Boeing will have cause for concern, a far easier target for retaliation is most likely to be U.S. commodity exports.
The United States is the world's biggest exporter of liquefied natural gas (LNG), and ranks fourth internationally for exports of crude oil and all grades of coal.
A significant buyer of U.S. commodities is China. If Trump were to enforce tariffs of 50% on its exports, Beijing might efficiently ban all product imports from the United States, either formally or informally.
U.S. exports of petroleum to China were 10 million barrels in July, according to commodity experts Kpler, which figure is expected to rise to 16.58 million barrels in August, which would be the most considering that April 2023.
For the first 8 months of this year U.S. crude exports to China are tracking at about 309,000 barrels daily (bpd),. which represents just about 3% of China's total imports, but. represent about 7.5% of total U.S. deliveries.
Simply put, it would likely be relatively simple for China to. stop purchasing U.S. crude and find alternative suppliers, such as. Angola and Brazil.
However how easy would it be for U.S. oil manufacturers to change. the loss of Chinese purchasers?
Much will depend on whether other nations put tariffs on. U.S. commodity exports.
Envision if the European Union, Japan and South Korea all put. a 10% tariff on U.S. crude in retaliation for Trump putting a. similar impost on their exports to the United States.
The European Union, Japan and South Korea typically account. for about 60% of U.S. unrefined exports.
By putting tariffs on U.S. crude, LNG and coal, the rest of. the world could keep U.S. energy exports in the market, but. force U.S. companies to either offer discounts to keep their. rates competitive or lower output.
US LNG EXPOSED
U.S. LNG exporters may be more susceptible than crude. producers, given they have no alternative markets other than. exports.
For China, changing U.S. LNG would be more challenging than. changing U.S. crude, but still likely manageable, offered the relatively. little percentage of U.S. LNG in its overall imports.
In July, China's imports of U.S. LNG were 670,000 metric. tons, or about 10.5% of the regular monthly total of 6.39 million.
For the United States, exports to China represent just about. 8% of its overall LNG shipments. But if Japan and South Korea are. added in too, then exports to the 3 primary Asian purchasers. rise to about a quarter of the total, based on U.S. deliveries in. June of this year.
If tariffs were placed on U.S. LNG by the North Asian. importers, it would put pressure on U.S. companies to lower. prices to compensate.
U.S. coal exports have balanced about 7.5 million tons a. month for the very first seven months of the year, however there is no. dominant purchaser. Rather there is a broad series of importers that. all purchase reasonably small volumes.
This means that buyers of U.S. coal could most likely find. alternative providers for the small volumes involved, but U.S. exporters might struggle to discover brand-new markets should a majority of. its current purchasers impose retaliatory tariffs.
In general, the image that emerges is among substantial. vulnerability for U.S. energy exporters if we do see another. trade war, offered how nations could respond to the tariffs. presently being proposed by the previous president's camp.
Naturally, Trump still has to overcome most likely Democratic. candidate and current vice president, Kamala Harris, in the. November election, and after that actually follow through on what is. likely to be a widely-criticised trade policy.
But the danger stays meaningful. In 2022, Russia's invasion. of Ukraine showed us what can happen when a political occasion. roils energy markets.
If Trump is chosen and does embark on a trade war, the. disturbance may not be quite on that scale. However commodity flows -. and thus a big part of the global economy - might be affected. if the market has to adjust to an unforeseeable political dynamic. once again.
The opinions expressed here are those of the author, a writer. .
(source: Reuters)