Metal Markets Are Preparing for a New World Disorder – by Joe Deaux, Danielle Bochove and Luzi-Ann Javier (Bloomberg News – July 6, 2018)

Donald Trump’s attempts to re-balance global trade have already sent the metals world into a tizzy. As countries respond to U.S. tariffs and sanctions, the disarray is set to increase.

Steel prices and aluminum premiums are shooting up in the U.S. thanks to tariffs, threatening to wreak havoc on manufacturers. Everywhere else metal prices are on a roller-coaster ride, with copper and zinc retreating on fears of slowing demand. If equity investors have stayed sanguine so far, metal investors are voting with their feet.

The next steps may be more dramatic as the U.S. and China engage in trade-war brinkmanship that may involve hundreds of billions in tariffs on everything from cars to soybeans.

For AKE International analyst Maximilian Hess, the standoff is part of an uptick in geo-economics, a mix of policy and economics, that will squeeze or aid certain metals companies and commodities. Here are some thoughts on casualties and beneficiaries.

Friendly Fire

Trump tariffs have helped make U.S. steel prices among the highest in the world. That swells the bottom line of domestic producers such as Nucor Corp. and U.S. Steel Corp. as well as benefiting the U.S. plants of foreign companies like ArcelorMittal.

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