March 2, 2018 / 12:59 PM / 2 years ago

METALS-LME aluminium steadies, supported by race to beat new U.S. tariffs

* LME/ShFE arb: bit.ly/2wZSAEz

* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Adds closing prices)

By Maytaal Angel

LONDON, March 2 (Reuters) - London aluminium prices steadied on Friday, helped by a weaker dollar and a scramble to deliver more of the metal to the United States before President Donald Trump imposes hefty new tariffs on imports.

Trump said on Thursday he would impose tariffs of 10 percent on aluminium imports and 25 percent on steel imports into the United States, sparking fears of a global trade war as he risks retaliation from the likes of China, Europe and Canada.

“The market is confused as to how to digest this (but) in the short term it’s bullish,” said Oliver Nugent, commodities strategist at ING, adding this was evident in rising aluminium premiums or surcharges for metal shipments in Japan.

“We’re expecting a rush of material into the U.S. before tariffs are implemented. Longer term the question becomes will the U.S. draw down its existing stocks rather than import. That would be bearish,” he said.

FUNDAMENTALS

* ALUMINIUM PRICES: Three-month aluminium on the London Metal Exchange ended up 0.1 percent at $2,149 a tonne, bucking a mostly falling trend in base metals. Aluminium on the Shanghai Futures Exchange (ShFE) closed down 0.1 percent after touching a two-week high.

The “import duty increase on aluminium products will have a small impact on China’s aluminium export and domestic market,” Argonaut Securities said in a note.

“China’s aluminium products exports to the U.S. accounted for around 14 percent of its total exports in 2017 and represent only 1 percent of China’s total aluminium production.”

* US PREMIUMS: Spot aluminium premiums in the United States spiked to the highest in almost three years as buyers sought to secure metal before the tariffs come into force.

* JAPANESE PREMIUMS: A global aluminium producer has offered Japanese buyers a premium of $133 per tonne for the April to June quarter, up 29 percent from the current quarter.

* GLOBAL MARKETS: World equity markets slid further and the U.S. dollar dropped to its lowest in more than two years against the yen on Friday as concern over a global trade war added to investor uncertainties about rising inflation and the outlook for U.S. interest rates.

* TRADE WAR: The firm response Europe has pledged to planned U.S. tariffs on steel and aluminium imports is likely to stop short of triggering a trade war. Australia’s trade minister said Trump’s planned tariffs risk retaliation and could cost jobs.

* OTHER METALS: Copper ended down 0.4 percent at $6,898 a tonne, zinc closed down 1.5 percent at $3,355, lead closed up 0.1 percent at $2,448, tin ended down 0.8 percent at $21,475 while nickel ended down 0.2 percent at $13,450.

Additional reporting by Tom Daly in Beijing Editing by Mark Potter and Elaine Hardcastle

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