ACCCI Presentation: A New US Administration and

Transcript:ACCCI Presentation: A New US Administration and:
ACCCI Presentation: A New US Administration and Changing Global Coking Coal Market Dynamics May 2025 McCloskey Research Charles Dayton – Associate Director, Research and Analysis cdayton@opisnet.com Agenda Tariffs and Why They’re Good For Exports February 1: 25% tariffs on Mexico and Canada and another 10% on China February 3: 30-day pause before tariffs with Mexico and China went into effect, China remained February 4: China responds with a 15% tariff on LNG and coal and a 10% tariff on many others, effective February 10th February 10: Trump announces further hikes on steel and aluminum March 4: Canada and Mexico tariffs take effect; Doubles Chinese tariffs to 20% March 6th: Trump postpones Canda and Mexico tariffs again to April 2nd March 10th: China retaliates on farm products with 15% tariffs April 2nd: Liberation Day Navarro: “Let’s take Vietnam. When they come to us and say, ‘we’ll go to zero tariffs,’ that means nothing to us.” It’s about trade deficits it’s not about tariffs! And the best way to reduce trade deficits… US EXPORTS! Within a week amidst a meltdown in US bond and stock markets Trump announces a 90-day pause on reciprocal tariffs, promises no more extensions China tariffs bumped up to 125% and later 145%, a de facto embargo Since It’s All About China… Chinese Steel Production A weak property sector (real estate starts are down by 67% from 2020 levels), although declines have bottomed out. Other sectors have been showing better numbers – e.g. stronger manufacturing production and government stimulus supporting infrastructure investment, although growth started to slow down. Chinese steel production will be down ~1.5-2% this year. Rumors are circulating regarding a potential 50 million-tonnes reduction in crude steel output enforced by the government in 2025. Surveys of major steel mills indicate they are currently operating at full capacity, with no existing or planned production curtailments (for now) The Chinese Relief Valve: Exports China has gone from virtually flat net auto exports as recently as 2020 to the largest auto exporter in the world As demand has fallen domestically, exports have taken up the slack Section 232, etc., world has focused heavily on steel and aluminum tariffs to staunch exports and protect domestic markets – steel and aluminum exports are a huge source of friction with trading partners We expect China to push hard to avoid isolation and cut deals with trading partners see Canada and Europe EVs