An employee passes the electric arc furnace at Liberty Steel’s Aldewerke mill in Rotherham, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

China's Tit-for-Tat Tariffs May Actually Boost U.S. Metal Makers

(Bloomberg) -- China’s plan to counter U.S. import tariffs may throw global aluminum and steel traders into a tizzy, but the net result could be a boon for American primary-metal producers.

The retaliatory plan to slap tariffs on U.S. aluminum scrap and some steel products may boost American supplies, lowering raw-material prices, says Zaner Group LLC’s Peter Thomas. That could coax some metal producers to restart unused capacity in Rust Belt states if infrastructure spending picks up.

“In Indiana they’re going to be making a huge push to get things fired up,” Thomas, a Zaner senior vice president, said Friday by phone.

One aluminum scrap trader agrees with the premise, but he says the other side of the coin is that suppliers could be the biggest losers. Marvin Polikov, a vice president at aluminum scrap trader Metal Exchange in St. Louis, also says companies need a lot of time before they can, and probably would, restart unused refineries.

Either way, Polikov is advising the world to stay calm and see how it all pans out -- especially after the hysteria of Donald Trump’s original import tariffs was later doused when the U.S. started doling out exemptions to some of its biggest metal suppliers.

While Polikov hopes restraint will be the order of the day, he isn’t hopeful. “Human nature is to panic.”

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Stock Market News on BloombergQuint