UTC+8 ( BJT)

US to put 10% taxes on $300 billion China goods

The U.S. President US Donald Trump announced to impose 10% tariffs on $300 billion Chinese goods starting September 1, which has stirred China’s stocks and steel futures market, Mysteel Global notes.

“U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%...” Trump posted on his twitter at 10:26 on August 1 local time after China and U.S. have failed to reach any agreements during the latest talks that ended on July 31.

By the morning of August 2 (Beijing time), neither the Office of the United States Trade Representative nor China’s Ministry of Commerce issued any statements regarding the new tariffs, Mysteel Global noted.

The news, nevertheless, immediately triggered anxiety among the Chinese ferrous market participants and was clearly reflected in China’s ferrous futures market, as both the rebar futures on the Shanghai Futures Exchange and the iron ore futures on the Dalian Commodity Exchange tumbled at the start of the morning trading on August 2.

“We all know that Trump is rather unpredictable, but the news was still rather abrupt, and it is a catalyst in the steel market on top of the continuing pile-up in steel inventories since June, and has deepened the pessimism,” a ferrous futures analyst from South China’s Guangdong province commented.

“Its (announcement of tariffs) impact on the steel market sentiment is obvious even in our market that is not as sensitive as that in East China,” a steel trader from Central China’s Henan province said, adding, “it is making the bad situation worse.”

China’s physical steel market has been in a lull amid the sluggish demand, and as of July 31, rebar stocks at steel traders in 35 Chinese cities increased for the eighth consecutive week to 6.3 million tonnes, or up 39.9% on year, and rebar inventories at 137 steelmakers also rose for four straight weeks to 2.5 million tonnes, up 52.3% on year, according to Mysteel’s latest weekly survey.

SHFE’s most-traded October rebar contract closed the Friday morning trading at Yuan 3,819/tonne ($551.1/t), down Yuan 59/t or 1.5% from Thursday’s settlement price, and DCE’s most-traded January iron ore contract declined Yuan 20.5/t or 2.7% over the same period to Yuan 736/t.

It remains a question, though, whether the US will proceed to impose the 10% taxes on the additional $300 billion Chinese products, and the next round of negotiation between the China and US is scheduled to be held in US in September, Mysteel Global understands.

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Hongmei Li, li.hongmei@mysteel.com