Image Source: Statista
By Charles F Moreira, Editor
When US president Donald Trump announced on 1 March 2018 that his country would be implementing a 25% tariff on steel and 10% on aluminium imports, it sparked fears of retaliatory tariffs on imports from the US by her major trading partners.
The Edge Markets of 5 April 2018 reported that Malaysian officials would be meeting their US counterparts to negotiate the 30% import tariff on solar panels, whilst International Trade and Industry Minister Datuk Seri Mustapa Mohamed said he has also requested for Malaysia to be exempted from the steel and aluminium tariffs.
Where do US steel imports come from?
Well, the figures presented by analyst firm Statista vary based upon different sources.
Based upon figures from the US Department of Commerce, Enforcement and Compliance, Canada was the largest supplier of steel to the US in 2017, with the US importing 5.57 MMT of steel from Canada that year, followed by Brazil (4.66 MMT), South Korea (3.40 MMT), Mexico (3.15 MMT), Russia (2.86 MMT), Turkey (1.98 MMT), Japan (1.72 MMT), Germany (1.38 MMT), Taiwan (1.13 MMT), India (0.743 MMT), China (0.74 MMT) and Vietnam (0.679 MMT).
Based upon figures from the European Commission and the Peterson Institute, the US imported 6.85 MMT of steel from Canada in 2017, followed by Russia (5.16 MMT), the European Union (4.95 MMT), Brazil (4.59 MMT), Mexico (2.41 MMT) and South Korea (1.31 MMT).
In terms of the value of these imports in billions of US dollars (bil USD), US imports from Canada was worth 5.1 bil USD in 2017, Russia (1.4 bil USD), the E.U. (6.2 bil USD), Brazil (2.4 bil USD), Mexico (2.5 bil USD) and South Korea (2.8 bil USD).
Impact on Malaysia
Malaysia is not mentioned in the above statistics but according to The Sun Daily of 11 March 2018, the US imported a mere 96,000 metric tons of steel from Malaysia in 2017, or between 0.2 to 0.3% of total US imports of between 34 and 37 MMT that year.
Datuk Soh Thian Lai, president of the Malaysian Iron and Steel Industry Federation (Misif) said that the impact of these tariffs on Malaysia would be minimal, given the relatively small volume of Malaysia’s steel exports to the US
Instead, Datuk Soh was confident that Malaysia would still be able to find alternative markets for these 96,000 metric tons exported into the US
He was also believes that probably steel prices in US will increase fast enough in the near term and US importers will still be able to import steel from Malaysia despite the 25% duty.
However, in contrast to Datuk Soh’s cool and calm response, local reaction to Trump’s initial announcement on 1 March was rather panicky, resulting in a steep drop in prices of steel and aluminium stocks on Bursa Malaysia, followed by a continued downtrend throughout the rest of March into early April.
Nikkei Asian Review of 2 March 2018 reported that stock prices of Ann Joo Resources fell 3.8% at RM3.55, Press Metal Aluminium Holdings fell 2.4% at RM5.65, CSC Steel Holdings was down 4% at RM1.46, Malaysia Steel Works (KL) was down 4.4% at RM1.09.
Ann Joo’s stock price continued to fall throughout March to as low as RM2.83 and rebounded sharply on 9 April 2018, then pulled back to close at RM3.05 on 16 April 2018.
Press Metal’s stock fell to a low of RM3.84 on 6 April and rebounded sharply to around RM4.37 on 9 April, and closed at RM4.83 on 16 April 2018.
CSS Steel’s stock fell to close at a low of RM1.29 on 6 April, rebounded sharply to RM1.34 on 9 April, continued rising to close at RM1.41 and has since pulled back to close RM1.37 on 16th April 2018.
Malaysia Steel Works stock fell to a low of 71.5 sen around 3 or 4 April, then gradually rebounded to 90.5 sen and pulled back slightly to 88.5 sen on 16 April 2018.
Well, it looks like market confidence in Malaysia’s listed steel and aluminium exporters is gradually returning after a rather panicky market reaction following Trump’s initial announcement.