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Metals’ Fragile Recovery Takes the Back Seat amid Trade Rhetoric

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May. 6 2019, Published 12:33 p.m. ET

Miners

Donald Trump has stepped up his trade rhetoric by hiking up the tariff on $200 billion in Chinese goods to 25%. He has also threatened a 25% tariff on other Chinese goods. Broader markets—particularly metal and mining stocks—have fallen as the trade war heats up.

As of 11:10 AM Eastern Time today, Freeport-McMoRan (FCX) and Alcoa (AA) had fallen 2.5% and 3.7%, respectively. In the steel space, U.S. Steel Corporation (X) and Cleveland-Cliffs (CLF) had fallen 1.5% and 1.1%. The SPDR S&P Metals and Mining ETF (XME) was down 1.2%.

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Fragile recovery

Metal and mining stocks have recovered slightly this year with China’s slowdown concerns easing. Some economic data has allayed concerns over the country’s economy, including its first-quarter GDP growth beating expectations. With Trump taking a tough stance on China talks, he may focus on the country’s economic recovery. Given China’s status as a major global metal consumer, miners came under pressure today.

ArcelorMittal

ArcelorMittal (MT) has announced it plans to curtail some of its capacity in Europe, where the economy has been weak this year. European steel demand has been tepid, and imports have reached record highs. ArcelorMittal blamed higher imports and rising carbon costs for its decision to lower production.

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