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Global Commodities Roundup: Market Talk

2 Mar 2018 10:01 am

The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.

1001 GMT - U.S. President Trump's blanket 25% tariff on steel imports was "politically unfeasible and will be viewed as a direct tax on U.S. consumers," according to Seth Rosenfeld, a senior research analyst covering European and U.S. steel at the investment bank Jefferies in London. The bank, however, remains bullish on U.S. steelmakers, with prices heading sharply higher and imports sinking. But he added: "For an equity market already obsessed with inflation risks... get ready for a doozy!" As for European steelmakers, Mr. Rosenfeld expects the European Commission to "respond aggressively and quickly" with hawkish measures of its own to protect European mills. Mr. Trump's decision to on Thursday announce the broad sweep of his tariff plans without policy details left Mr. Rosenfeld wondering if we there would be exemptions for NATO and NAFTA members. He asked, are we really at "the beginning of an extended negotiating process?" (zeke.turner@wsj.com; @zekefturner)

0937 GMT - Jefferies says that Evraz's recent track record has assuaged the brokerage's past fears, which were founded on concerns that earnings would be hampered by cost inflation in Russia and slow margin performance in the U.S. Jefferies says that Evraz is currently in a position to benefit from its unique leverage on vanadium and coking coal, which are seeing rising prices due to Chinese demand and persistent supply constraints. Prices will normalize in time, but could stay higher for longer, Jefferies says. The brokerage raises its rating to hold, and its target price to 425 pence. Shares down 3%, or 13.30 pence, at 434.90 pence. (oliver.griffin@dowjones.com; @OliGGriffin)

0926 GMT [Dow Jones] The technical outlook of gold turned bullish as the prices broke above the declining trend line, which emerged at February 27, on the 30-minute chart. A new challenge to its next resistance level at $1,321 (the high of March 1) seems more likely to occur. The 20-period moving average crossed above the 50-one. The MACD is above its 0-level. The RSI also broke above the declining trend line, which emerged on February 28. As long as $1,311 is not broken, look for a rebound with $1,321 and $1,325.5 as a target. Alternatively, only a break below $1,311 would turn the outlook to negative with a down target at $1,304. Gold is trading at $1,317 an ounce. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] (analysts-europe@tradingcentral.com)

0922 GMT - U.S. President Trump's newly announced tariffs on steel imports would have a direct negative fallout for European steelmakers, said Jürgen Kerkhoff, president of the German Steel Association. The 13 million tons in reduced imports targeted by the U.S. could flow instead directly into Europe, which is already grappling with excess capacity, he said. "If the EU doesn't act, our steel industry is going to be left footing the bill for American protectionism," Mr. Kerkhoff said. In the last year, rolled steel imports in the EU increased 1% to 32 million tons, a new all-time record, he said. The U.S. bought one million tons of rolled steel from the EU last year, making it the most important export destination for European steelmakers outside the bloc. (zeke.turner@wsj.com, @zekefturner)

0915 GMT - German Foreign Minister Sigmar Gabriel said that U.S. President Trump's newly announced tariffs on steel and aluminum imports unfairly affect European allies. "Unlike other countries, German and European companies in the steel and aluminum industry don't use dumping prices to get an unfair competitive advantage," Mr. Gabriel said in a statement Friday morning. "But this kind of sweeping world-wide blow from the U.S. would precisely hit our exports and labor market the hardest." As far the U.S. reasoning for the tariffs--that protecting American steelmakers is a matter of national security--Mr. Gabriel said America's allies in the North Atlantic Treaty Organization would find it "impossible to understand." He called on Mr. Trump to reconsider the measures. "We must do everything possible to avoid an international trade war," he said. (zeke.turner@wsj.com; @zekefturner)

0836 GMT - Selling of Malaysia steel stocks today is just a knee-jerk reaction to planned US tariffs, a broker tells WSJ. That as Moody's says most steel produced in Asia stays there, so regional impacts should be muted. The broker adds local steel demand remains strong on the back of infrastructure spending across Southeast Asia. Malaysia's biggest steel-product maker, Ann Joo, has logged a 6% stock drop, the most since last March, while Malaysia Steel Works has also dropped 6% today and Lion Industries is off 3% ahead of the close. (yantoultra.ngui@wsj.com; @yantoultra)

0828 GMT - Asia equity markets closed broadly lower, after President Donald Trump announced plans for tariffs on steel and aluminum imports, fueling concerns over trade protectionism. "If Trump does indeed announce tariffs of 25% on imported steel and 10% on imported aluminum, then retaliation seems inevitable," says Rob Carnell, ING's head of Asia research. The Nikkei Stock Average led losses, down 2.5%. Automakers were particularly badly hit, with Honda down almost 4%. A firmer yen also added pressure. Elsewhere losses were more muted. Shanghai Composite, Australia's S&P/ASX 200 and Taiwan's Taiex were off around 0.8%. The Hang Seng Index slid 1.5%. Regional steelmakers suffered, with Nippon Steel 3.8% lower, Posco down 3.6%, and Angang off 2.4%. (ese.erheriene@wsj.com; @Ese_Journo)

0817 GMT - U.S. President Donald Trump's announcement of plans to impose tariffs on steel and aluminum imports "look like a clean dollar negative," in particular against the safe-haven yen, says ING. USD/JPY has already fallen to a two-week low of 105.70, according to Factset, and ING say it could "easily" break below 105 in the short term. A fall below 105.54 would mark USD/JPY's lowest level since late 2016. Analysts are concerned about the possibility of retaliation from other countries in response to Trump's tariffs, including China and Canada. (jessica.fleetham@wsj.com)

0757 GMT - While earnings surged 92% last year, Malaysian state oil company Petronas prefers to remain conservative on crude-price assumptions. CEO Wan Zulkiflee Wan Ariffin says the firm is predicting oil's 2018 average being below current levels ($64 for Brent) as he sees the market remaining volatile. That as Petronas is budgeting for $52 oil this year, he added. Nevertheless, Petronas plans a higher capital expenditure of around MYR55 billion this year, versus MYR44.5 billion last year. This could be a good news for local oil and gas services firms as jobs could be aplenty this year, if not, more than before. (yantoultra.ngui@wsj.com; @yantoultra)

0737 GMT - Chinese stocks faded into the weekend as equities elsewhere in the region continued to reverse their late-February rebounds. The Shanghai Composite fell 0.6%, putting the week's drop at 1%. But small caps were the week's starts, with the Shenzhen Composite climbing 2.6% and the ChiNext jumped 6.2%, the best in 21 months. Both, though, fell upwards of 1% today. Beside financial regulations expected to be the main theme in next week's political meetings in Beijing, Bank of America Merrill Lynch expects economic and fiscal topics also likely to have an impact on equities. Some internet and medical stocks remained hot today. (john.wu@wsj.com)

0659 GMT - Pressure on Hong Kong-listed metals firms has eased some as the day's trading progresses and investors assess Trump's steel- and aluminum-tariff plans. Moody's expects the move's direct impact on producers being manageable for the steel sector and rated makers in the region as most made in Asia stays there. That as exports of aluminum and steel to the US typically amount to less than 1% of GDP or exports. Maanshan and Angang are now down some 3% while Chalco is off 2%. (john.wu@wsj.com)

Cheers,

John

0636 GMT - AmBank Research turns bullish on Malaysia's oil-and-gas sector as the 4Q earnings season points towards a bright outlook and on anticipation that crude stays above $60/barrel. The upgrade also comes despite state oil company Petronas' cautious capital-spending plans. As asset-utilization rates have begun to improve, AmBank expects a bottoming of charter rates even in the absence of any upward trajectory at this juncture. (yantoultra.ngui@wsj.com; @yantoultra)

(END) Dow Jones Newswires

March 02, 2018 05:01 ET (10:01 GMT)

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