7 April 2025 | 9:24PM HKT China Commodities Tariffs - China steel and metals, and ag commodities On April 2nd, President Trump announced "reciprocal" tariffs on trading partners, resulting in what we estimate to be an increase of 26pp in the average effective US tariff rate on China, which would bring the total effective tariff rate on Chinese goods to 58% (link). In response, on April 4th, Chinese policymakers announced a 34pp tariff increase on all US exports to China, in addition to retaliatory tariffs i ...

V i e w p o i n t | 06 Mar 2025 00:02:47 ET │ 16 pages Global Metals & Mining Supply Side Reform 2.0 in Steel in China: Where to for Iron Ore? CITI'S TAKE Supply side reform 2.0 in steel looks very likely in our view and would likely lead to cuts in steel production (and steel exports from) China. While good for China and ex-China steel producer margins, the potential impact on iron ore is more debatable and depends on steel demand (China or ex-China) than on production. While steel production ex-China is l ...

Investment Rating - The report does not explicitly state an investment rating for the industry, but it provides insights into inventory trends and production data that may influence investment decisions. Core Insights - China's physical inventory trends for metals such as steel, iron ore, copper, aluminum, and zinc are being closely monitored, particularly following recent monetary policy loosening [1][2]. - Steel production in China has shown a slight increase of 2% week-over-week, with iron ore arrivals reaching the highest levels in over five years [1][2]. - Copper premiums in China fell by 20% last week, indicating a potential shift in demand dynamics [1][7]. - The report highlights that while steel inventories have decreased significantly, there is a risk of inventory buildup if production outpaces actual consumption [2][6]. Summary by Sections Steel Production and Inventory - CISA data indicates a 1.6% increase in steel production for the first ten days of October, with production now only 4% lower year-over-year [1]. - Preliminary data shows a 10% increase in steel exports for September compared to August, reaching an annualized rate of 124 million tons, the highest since June 2016 [1][12]. - Total steel inventory in China has decreased by 25% over the last two months, now at its lowest level since January 2024 [10]. Iron Ore Trends - Landed iron ore arrivals in China rose by 45% week-over-week to 30.43 million tons, marking a 6% year-over-year increase [2][4]. - Global iron ore shipments increased by 1% week-over-week but were down 2% year-over-year [4][11]. - Iron ore portside inventory in China is approximately 25 million tons above the normal seasonal average, but it has decreased by 5 million tons in the last month [11]. Copper and Aluminum Insights - Copper inventories in China have increased by 25,000 tons over the last two weeks, although they remain below the five-year average [7][12]. - Aluminum inventory de-stocking has slowed in October, but it remains slightly stronger than the five-year average [8][16]. - The report forecasts copper prices to reach $11,000 per ton in Q2 2025 and $11,500 in Q3 2025, approximately 15% above current spot prices [7]. Market Dynamics - The report notes that steel mill margins have improved to their highest levels in about two years, although margins for hot-rolled coil (HRC) have weakened recently [8][10]. - Overall steel demand in China remains 6% lower year-over-year, despite a 2% week-over-week increase in domestic consumption [1][6].

Investment Rating - The industry investment rating is Attractive [1]. Core Insights - Steel apparent consumption is increasing following the National Day Holiday, with long products showing a significant rise in output due to low inventory and improved profitability [1][1]. - Steel inventory has decreased at both traders and mills, with traders' inventory down by 205 kt (2.2% WoW) and mills' inventory down to 3,954 kt (2.1% WoW) as of October 10 [1][1]. - Iron ore inventory at small- and medium-sized mills decreased by 19.7 kt (9.6%) from September 25, indicating a tightening supply [1][1]. Summary by Sections Steel Consumption and Inventory - Apparent consumption of long and flat products increased by 25.5% WoW and 3.3% WoW, respectively, but decreased by 8.6% and 0.4% YoY [1]. - The inventory at traders decreased by 205 kt, with long products down 3.4% WoW and flat products down 1.4% WoW [1]. Iron Ore Market - Iron ore inventory at ports decreased by 1.5% WoW to 143.8 mt as of September 27, with the operating rate at sample mines increasing to 63.3% [1]. - Combined shipments from Australia and Brazil fell by 2.2 Mt week-on-week, primarily due to softer shipments from Rio Tinto [1]. Production Insights - The utilization rate of 247 mills increased by 0.39 ppts WoW to 84.5%, with CISA member mills' production at 1.99 mnt per day, up 2.7% from the preceding 10 days but down 6.8% YoY [1]. - Weekly output for long products rose by 3.8% WoW to 3.28 mnt, while flat products fell by 0.3% WoW to 5.36 mnt [1].