Aluminum, steel most exposed metals to Trump tariffs, Citi says
A 25% tariff as announced by Trump on Monday would likely cause steel prices to rise by $100 to $150 a short ton, the analysts said.
Zinc rallied to the highest since April 2019, lifted by concerns over falling Chinese production and as hopes for a US stimulus deal buoyed market sentiment.
Refined zinc output in China, the top producer, fell to 562,300 tonnes last month, down by 6,900 tonnes from October, Shanghai Metals Market said, citing a monthly survey of smelters. Production is expected to drop further in December as falling processing fees crimp margins, according to the researcher. Treatment charges for Chinese smelters to process zinc concentrate slumped to the lowest level in more than two years.
Supply constraints have helped fuel a 70% rebound in prices from a March low, even as demand took a hit in the early stages of the coronavirus pandemic. Concerns were heightened last month when Vedanta Zinc International suspended operations at its Gamsberg mine in South Africa. Since June, demand for zinc and lead has bounced back, led by a recovery in China, said Trafigura Group Ltd., the world’s second-biggest independent metals trader.
“Europe has also recovered well and we see continued pickup across all markets into the fourth quarter,” Amin Zahir, Trafigura’s head of metals and minerals trading, said in an earnings statement. “We remain positive about demand for both metals on a forward-looking basis, with continued support from both construction and automotive industries.”
The zinc market “gained support from recent suspension at South African based Gamsberg mine and concentrate market tightness in China,” Wenyu Yao, senior commodities strategist at ING Bank, said in a note.
Zinc and copper have surged about 25% this year, pacing gains among six main base metals on the London Metal Exchange, as China leads a global economic rebound from the coronavirus pandemic.
All metals traded higher on Wednesday as global equities approached another record high as hopes for a US stimulus deal countered fears about resurgent coronavirus cases. Benchmark Treasuries and the dollar slipped for the first time this week.
Treasury Secretary Steven Mnuchin made a surprise re-entry into talks on a 2020 pandemic-relief package with a $916 billion proposal that opened a potential new path to a year-end deal despite objections from Democrats over elements of the plan.
Zinc rose 1.6% to $2,844 a tonne as of 2:12 p.m. in London, advancing for a fifth day. Copper added 0.6% to $7,746 a tonne and aluminum climbed 2.6%.
(By Mark Burton and Yvonne Yue Li)
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