US metal tariffs will damage some Asian corporations greater than others: Nomura

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Recent tariffs on U.S. metal imports will probably damage some Asian metal producers greater than others, in accordance with Nomura.

Smaller South Korean corporations are anticipated to be hit tougher than their bigger counterparts whereas Japanwill in all probability expertise minor impression after U.S. President Donald Trump final week signed off on tariffs of 25 p.c on metal imports, analysts from the analysis agency stated in a be aware.

Smaller Korean metal corporations are prone to be extra negatively affected than larger gamers as a result of degree of publicity they must the U.S.

“Due to the sequence of anti-dumping and countervailing obligation orders imposed prior to now couple of years, Posco has lowered U.S. exports considerably, and the U.S. at the moment represents lower than 1 p.c of its carbon gross sales volumes,” Nomura analysts Cindy Park, Yoon Ki Kim and Yuji Matsumoto stated in a Friday be aware. Posco is the most important metal producer in South Korea.

For Hyundai Steel, one other giant Korean metal producer, the U.S. represents round 5 p.c of complete gross sales quantity.

“A extra seen impression will probably be centered round corporations resembling Seah Steel, Husteel and Nexteel, which have a lot increased U.S. exposures,” the analysts wrote.

Japan can be anticipated to see restricted direct impression, given how simply 1.eight p.c of its crude metal manufacturing and 1.5 p.c of metal product output final yr have been exported to the U.S., in accordance with Nomura.

Those views have been just like what was expressed by scores company Moody’s in a be aware final week, when it famous that the direct impression of tariffs could be moderate on Korean steelmakers, to low on different Asian nations.

South Korea and Japan are the third and seventh largest sources of U.S. steel imports, in accordance with a 2017 U.S. Department of Commerce report — they’re additionally the 2 largest sources of U.S. metal imports from Asia.

Nomura’s analysis, which considers metal imports from the European Union collectively, ranks South Korea and Japan as the general fourth and eighth largest sources of U.S. metal imports, respectively.

Steel producers within the area traded increased on Monday, recovering from losses recorded within the final session. The Topix Iron & Steel index rose 1.54 p.c by noon commerce, with Nippon Steel and Sumitomo Metal up 2.three p.c and JFE Holdings increased by zero.53 p.c.

Elsewhere, South Korea’s Posco and Hyundai Steel have been up 2.9 p.c and 1.96 p.c, respectively.

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