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Snapshot of China’s crucial mineral export controls
Global automakers Sounding the Alarm The world is facing a shortage of rare-earth magnets due to China's restrictions. These materials are vital for automotive, defence and clean-energy industries. German Automakers have become the latest to warn about China's export restrictions, which threaten to close production and shake their local economies. This follows a similar complaint made by an Indian EV manufacturer last week. U.S. automakers, Japanese and South Korean carmakers warned Donald Trump on May 9. Car factories Could close. Rare earths are now part of an export control list that already includes over a dozen minerals, and materials related to them. Exporters must apply for licenses in Beijing before they can sell overseas. China has also banned the export of antimony, gallium, and germanium to the United States. Here is a list of all Beijing’s restrictions on mineral exports since 2023. RARE EARTHS China put rare earth magnets, seven rare earth elements (samarium gadolinium terbium dysprosium lutetium scandium yttrium) and related items, including samarium gadolinium terbium lutetium scandium yttrium and terbium dysprosium terbium and tetradolium) on the export control list for April. The announcement was part of a larger package of retaliation to Washington's tariffs. However, the controls are global and the press release did not mention the United States. China produces 90% of rare earths in the world, which is a grouping of 17 elements that are used by the electronics, defense, and electric vehicle industries. The U.S. only has one rare earths mining facility and the majority of its supply goes to China for refinement. China is the only country that has mastered this environmentally damaging and technically challenging refining method. China produces 90% of the world's refined products. China has been tightening the control of its rare earths industry for years. Beijing added a ban on the export of technology for making rare earth magnets to its existing technology-refining ban in December 2023. The domestic production is closely controlled by a quota system that only grants quotas to state-owned miner. TUNGSTEN, INDIUM, BISMUTH, TELLURIUM AND MOLYBDENUM China implemented export controls on five metals used for defence, clean energy, and other industries shortly after U.S. president Donald Trump's 10% tariff on Chinese products took effect in early February. Export licences are required for 20 products relating to tungsten, molybdenum, tellurium and bismuth. The curbs did not go as far as outright bans but were targeted at certain metals like molybdenum. BATTERY, LITHIUM AND GALLIUM PROCESSING TECHNOLOGY China proposed in January to restrict the exportation of certain technology used to manufacture cutting-edge batteries components and to process lithium and gallium, which are critical minerals. The announcement didn't say when the proposed amendments, which were open to public comments until early February, might come into effect. Since the proposal was made, at least one company has ceased exporting the products listed. ANTIMONY, GALLIUM, GERMANIUM Beijing has banned the export to the U.S. of three minerals that are critical to the chip industry in China. This was done to respond to Washington's renewed crackdown against the sector. China has gradually introduced export licensing schemes for these three metals over the past 18 months. Exports of antimony to major buyers such as Japan, India, and South Korea, which is a strategic metal that's used in solar power equipment, munitions and flame retardants had only just begun three months after the export licenses were issued. China is the world's largest producer of these three metals, and produces or refines half to 90% of the global supply. GRAPHITE China announced that it will require export licenses for certain graphite products in October 2023 to protect its national security. China is the top producer and exporter of graphite in the world. It also refines over 90% of all graphite to a material used in almost all EV batteries. (Reporting done by Tony Munroe, Lewis Jackson. (Editing by Chizu Nomiyama Mark Potter Christian Schmollinger and Chizu Nomiyama)
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Sources say that India's Finance Ministry wants to lower energy prices in order to offer green steel incentives.
Two sources with knowledge of the matter say that New Delhi wants to control its inflation and expenditure, so it is looking for a softening in green hydrogen prices before deciding to provide financial assistance to steel producers who use clean energy. Indian steel producers are asking the federal government for incentives, as the country considers mandating a certain percentage green steel in all government projects. India, which is the second largest steel producer in the world after China, and one of the major emitters of greenhouse gases, has worked on a policy to reduce carbon emissions from the production. The delay in launching federal financial assistance could slow India's plans for energy transition to achieve the 2070 net-zero goal. The Steel Ministry is looking for incentives from the Finance Ministry to decarbonise efforts. Sources in the finance ministry have said that green steel is not economically viable and could be inflationary due to high costs of green hydrogen. One source declined to identify themselves as the discussions were not public. The source, who was referring to the thinking of the Finance Ministry, said that "Steel as an intermediate product would be expensive to manufacture green steel and it is important to find a balance between growth and sustainability." India's Finance and Steel Ministries did not reply to emails asking for comments. A majority of Indian steel plants rely on coal to operate their blast furnaces. The steel ministry has promoted green hydrogen as a viable alternative, but the high cost is a deterrent. India declared in December that steel with carbon dioxide emissions less than 2.2 tonnes per tonne finished steel will be considered "green steel". Global Energy Monitor reports that India's steel producers produce 2.55 tons of carbon dioxide for every ton of crude iron ore produced. This is 38% more than the global average, which is 1.85 tons. (Reporting and editing by Nidhi verma and Michael Perry; Reporting by Neha arora)
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Iran's Khamenei refuses US nuclear demands, vows to continue enriching uranium
Ayatollah Ayatollah Khamenei, Iran's supreme leader, said that Tehran would not abandon its uranium-enrichment program, and rejected a U.S. request aimed at ending a decades long nuclear dispute. He said the demand was against Iran's interests. The U.S. proposal to a new nuclear deal Oman, the Middle East envoy of President Donald Trump, Steve Witkoff, and Iranian Foreign Minister Abbas Araqchi, presented a letter to Iran on Sunday. Iran insists on maintaining its uranium-enrichment program on its own soil, and Tehran refuses to send its entire stockpile of highly-enriched uranium abroad - a possible raw material for nuclear weapons. Khamenei stated in a speech broadcast that "Uranium Enrichment is the key for our nuclear program and the enemies are focused on enrichment." He said that the U.S. proposal was "incompatible with our nation's belief of self-reliance, and its principle 'We Can.'" "The rude, arrogant and smug leaders of America have repeatedly demanded that we not have a nuke programme. "Who are you to decide if Iran should enrich?," he continued. Tehran has denied for years that it was seeking to develop nuclear weapons and says it only wants to master the technology to use it peacefully. On Monday, Reports that Tehran is ready to reject The U.S. proposal was rejected by Iran on the basis that it failed to meet Tehran's needs or soften Washington's position on uranium-enrichment. Since his return to the White House, Trump has re-launched his "maximum press" campaign against Tehran. This included tightening the sanctions and threatening to bombard Iran if negotiations fail. Trump, during his first term as president in 2018, renounced the 2015 nuclear agreement between Iran and six major powers. He also reimposed economic sanctions on Iran that have crippled its economy. Iran responded by increasing enrichment beyond the limits of the nuclear pact. Israel, Iran's arch enemy, sees the Islamic Republic's nuke programme as a threat to its existence and has threatened to bomb Iran's facilities in order to stop Tehran from acquiring atomic weapons. (Written by Nayera Abadallah and Parisa Haffezi, edited by Jacqueline Wong & Andrew Heavens).
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Xi praises Belarus, which is under sanctions, as China's true ally
Xi Jinping, Chinese president, praised Belarus for being a true Chinese friend when he met Alexander Lukashenko on Wednesday, the leader the sanctions-hit European country. He also urged his Russian ally, Alexander Lukashenko to join Beijing and oppose "hegemony" and "bullying". Lukashenko made his first visit to Beijing since he won the presidential election in January, which extended his 31-year reign of the former Soviet Republic. Western governments rejected his win as a fake. Belarus' economy has suffered from Western trade tariffs and sanctions due to its support of Russia's conflict in Ukraine. Minsk has become increasingly orientated towards the east after being cut off from Western markets. Minsk had allowed Russian forces use its territory as a staging ground for their invasion of Ukraine. Xinhua reports that Xi congratulated Lukashenko on his reelection in Zhongnanhai in Beijing. He also added that China and Belarus are "true partners and friends." "The friendship between China and the United States has been enduring for a very long time. The mutual political trust is unbreakable," Xi stated. Xi said that both countries must also "oppose hegemony and bullying and defend international fairness, justice and equity". Belarus' official news agency BelTA quoted Lukashenko saying, "You have accurately highlighted the main feature of our times - the unprecedented Western pressure on us, in particular on the People's Republic of China." Lukashenko stated, "Today, many countries including Belarus are looking at you, Beijing." Last month, Xi met with Vladimir Putin in Russia. He vowed that they would remain "friends of iron" in a world no longer dominated by America. Since Donald Trump's return to the White House in 2017, Washington has increased its pressure on Russia and China. Moscow is being urged to end the conflict in Ukraine quickly, while Beijing faces new tariffs. Lukashenko has been to China 15 times in the past years and has relied on Beijing for credit and investment despite Belarus being considered part of Moscow's traditional influence sphere. Minsk also looks to Beijing for assistance in transforming and upgrading its industries. Last year, Minsk became a BRICS member state and a partner nation. Despite China's pledge to increase bilateral cooperation, there are still economic imbalances. China's surplus in trade with Belarus increased by 47.6% from the previous year to $4.77bn, according to Chinese data. China's exports of cars, digital TV receivers, and washing machines outweighed its purchases of Belarusian goods, including farm fertilisers. (Reporting from Beijing by Ryan Woo and Melbourne by Lidia Kelly; Additional reporting provided by Beijing Newsroom. Editing by Jacqueline Wong, Raju Gopalakrishnan and Jacqueline Wong)
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Austria's Voestalpine predicts small profit increase, dented due to tariffs
Voestalpine, an Austrian specialty steelmaker, forecasted a modest increase in its core earnings for the year on Wednesday. It attributed this to a direct impact from U.S. Tariffs and high levels of uncertainty caused by the trade war. Voestalpine's annual report stated that President Donald Trump’s tariffs will have a negative impact on earnings of a few millions euros in the mid-double digits during the first quarter of 2019. The steel manufacturer, which supplies primarily the automotive industry with its products, expects to earn between 1.4 and 1.55 billion euro ($1.59 billion to $1.76 billion), before interest, tax, depreciation, and amortization. This compares with 1.35 billion euro in the previous years and the analysts' median estimate of 1.5 billion Euros in an LSEG survey. Voestalpine reported a lower revenue for the full year, due to a challenging economic climate and reorganization. These measures, it said, should increase its core earnings for the next year. The company's revenue dropped from 16.68 billion euros to just 15.7 billion euro a year ago. Analysts polled at LSEG expected a lower drop, to 15.85 billion euro. $1 = 0.8800 Euros (Reporting and editing by Milla Nissi-Prussak in Gdansk)
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As trade uncertainty persists, Asian stocks are rising and the dollar is fluctuating.
The dollar weakened as U.S. tariffs on steel and aluminum increased, and Asian stocks rose. This marks the latest chapter of the trade war which has roiled the markets throughout the year. Investors have been focused on the pace and lack of progress in trade negotiations. The deadline for U.S. trade partners to submit proposals for deals in order to avoid Trump's "Liberation Day", hefty tariffs, is Wednesday. The European Stock Futures market pointed to an opening higher as the European Central Bank began its two-day meeting, where it was expected to reduce rates on Thursday. South Korea's currency and stocks surged in Asia after the liberal candidate for president Lee Jae Myung won his election. This victory raised expectations of a rapid economic stimulus and market reforms, as well as easing policy uncertainties. The benchmark KOSPI rose more than 2%, reaching its highest level since August 2024. The MSCI broadest Asia-Pacific share index outside Japan was nearly 1% higher. Japan's Nikkei gained 0.8% while Taiwanese stocks rose 2%, after artificial intelligence giant Nvidia helped boost U.S. stock prices on Tuesday. The data showed that U.S. jobs opened up in April but that layoffs also increased, which indicates a slower labour market due to tariffs impacting the economy outlook. Investors have been watching a potential phone call between U.S. president Donald Trump and Chinese leader Xi Jinping this week, as tensions simmer between the two world's largest economies. Trump accused China on Friday of violating the Geneva Agreement to reduce tariffs and trade barriers. Beijing has said that it will protect its interests, and that this accusation is unfounded. The blue chip index in China rose by 0.58% on Wednesday, while Hong Kong’s Hang Seng index rose by 0.56%. The Trump-Xi negotiations remain the focus of attention, even though markets may have become numb to headlines about trade. "A grand deal seems unlikely, but any escalation may still cause a bout risk aversion", said Charu Chanana. Chief investment strategist at Saxo, Singapore. Trump also signed an executive order that will take effect on Wednesday the surprise announcement he made last week, that he would increase tariffs for steel and aluminum imports from 25% to 50%. Thierry Wizman is a global FX & Rates Strategist at Macquarie. He said: "We think that the steel & aluminum tariffs are a good example of other strategic tariffs which are likely to'stick.'" "With this, there is still little incentive for a U.S. Dollar rally to take root." DOLLAR WEAKNESS Investors have fled U.S. assets in search of safe havens this year, including gold, as they anticipate trade uncertainty to have a negative impact on the global economy. The Organisation for Economic Cooperation and Development (OECD) has revised its March estimates, due primarily to the impact of the Trump administration’s trade war. The dollar rose 0.18% against the yen on Wednesday to 144.225. The euro was unchanged at $1.1368. The dollar index (which measures the U.S. currency against six major currencies) was 99.31 on Monday, not too far away from the six-weeks low of 98.58 that was reached on Monday. The index has fallen 8.5% in the past year. Oil prices fell in commodities due to a loosening of the supply-demand equilibrium following an increase in OPEC+ production and lingering worries about global economic prospects because of tariff tensions. Brent crude futures fell 0.38%, to $65.38 per barrel. U.S. West Texas Intermediate crude crude dropped 0.41%, to $63.15 a barrel. Gold's gains this year have been staggering, reaching 28%, thanks to safe-haven flows.
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Palm oil prices fall due to a projected buildup of stocks and weaker rival oils
Malaysian palm futures fell on Wednesday, as the market anticipated that stocks would rise for a third consecutive month in the month of May. They were also pressured by the declines in edible oils on Chicago and Dalian. By midday, the benchmark contract for palm oil delivery in August on the Bursa Derivatives Market had fallen 8 ringgit (0.2%), to $3,926 ringgit (US$923.11) per metric ton. A Kuala Lumpur based trader stated that "if end stocks rise, this will pressure palm oil futures price, which is why the markets are down." A survey on Wednesday showed that Malaysian palm oil inventories will rise for the third month in a row in May. This is due to a modest increase in production, despite strong export demand. AmSpec Agri Malaysia, an independent inspector, estimated that exports of palm oil products from Malaysia had risen by 13.2% in the month of May. Cargo surveyor Intertek Testing Services predicted a 17.9% increase. Dalian's palm oil contract fell 0.88%, while the most active soyoil contract decreased 0.03%. Chicago Board of Trade soyoil prices fell by 0.45%. As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils. In May, India's imports of palm oil reached a six-month record. The price of oil fell in Asian trade due to concerns over rising OPEC+ production and tensions on tariffs, which threaten global economic prospects. However, worries about Canadian supplies provided a floor. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures. The palm ringgit's trade currency strengthened by 0.31% to the dollar. This made the commodity slightly cheaper for buyers who hold foreign currencies. Technical analyst Wang Tao stated that palm oil could retest the resistance level of 3,968 Ringgit per metric tonne. A break above this would lead to an increase to 3,998 Ringgit.
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Top sources of U.S. imports of steel and aluminum
On Wednesday, the U.S. tariffs on steel and aluminum imports doubled as President Donald Trump intensified a global trade conflict. Here is a list of major trading partners that will be affected. STEEL: About a quarter (25%) of the steel used in America is imported. The bulk comes from Mexico and Canada, or other close allies such as Japan, South Korea, and Germany. China is the largest producer and exporter of steel in the world, but it only sends a small amount to the United States. In 2018, tariffs of 25% were imposed on Chinese steel, which effectively shut the market out. Last year, China exported 508,000 tons of steel net to the U.S. This is 1.8% of all American steel imports. ALUMINUM: The U.S. relies more on imports for aluminum. Approximately half of the aluminum used in the U.S. comes from imports, the majority of which is Canadian. Canadian aluminum imports exceeded the combined total of nine other countries by 3.2 million tonnes last year. United Arab Emirates (UAE) and China are the next two largest importers, with 347,034 metric tons and 222,872 respectively. According to global standards, the U.S. aluminium smelting sector is relatively small. According to the U.S. Geological Survey, the total smelter capability in the country is just 1.73% the global total.
Trump's tariffs on steel and aluminum are a reality
U.S. president Donald Trump intends to double tariffs for steel and aluminum imports from Wednesday to 50%, increasing pressure on global producers of steel and intensifying his trade war.
Why is Trump doubling tariffs?
Trump wants to encourage and support investment in the domestic production of aluminum and steel, two essential materials for construction. Aluminium is used in transport and packaging.
These tariffs are already causing higher prices for consumers of steel and aluminum, as well as a decline in manufacturing. Meanwhile, the hurdles, such higher electricity prices, are very high.
About a quarter (25%) of the steel used in America is imported. The majority of this comes from Mexico and Canada, our neighbours.
The vast majority of aluminium imported into the United States comes from Canada. In fact, Canada exported 3.2 millions tons of aluminum to the United States in 2013.
What has been the impact of tariffs on U.S. prices?
The physical market premium covers freight, taxes and other costs.
On Monday, the premium AUPc1> increased by 54% to 58 U.S. Cents per lb ($1,279 per metric ton) from Friday. The premium has increased by more than 120% this year.
Goldman Sachs estimated that the premium needed to increase to $0.68 to $0.70 per lb in order to reflect the import tariff of 50%.
COMEX steel prices for hot rolled coils (HRCs) rose 6%, reaching a new session high of $910 per short ton ($1,003 per metric ton).
Josh Spoores, Director of Steel Americas Analysis for consultancy firm CRU, said: "The U.S. imports steel at a net rate, and we need imports to meet demand." This action will not prevent imports, but it will raise prices for domestic steel consumers, including manufacturers, in the U.S.
The Institute for Supply Management's (ISM) data showed that U.S. Manufacturing, which is heavily dependent on imported raw materials for its production, contracted for the third consecutive month in May to a six-month minimum, and factories continued to lose jobs.
Will the Tariffs Support U.S. Production?
Analysts say that higher steel and aluminum prices will boost profits of local U.S. producers like Nucor. However, building smelters may take up to five years or more. This would mean the completion of these smelters is likely to be beyond Trump's presidency.
Trump said that Nippon Steel would invest billions in modernizing U.S. Steel mills, with the aim of buying U.S. Steel. This will increase production.
Emirates Global Aluminium announced last month plans to build the United States' first new primary aluminum production plant since 1980. The plant will have a capacity of 600,000.00 tonnes of primary aluminum per year.
Century Aluminum, with federal funding, is also looking to build a "green" low carbon aluminium smelter.
Industry sources say that power prices pose another problem for companies trying to produce aluminum in the United States. They were also the reason behind the closing of many U.S. Smelters due to difficulties in agreeing on competitive long-term power purchase contracts because of a variety of factors, including volatile markets and regulations.
(source: Reuters)