Europe's minor metal markets have been slow to react to Donald Trump's re-election as US president, and any price movement in response is pending a reaction from US consumers and further details of Trump's tariff plans.
The biggest point of interest for European market participants is the potential impact of Trump's tariff plans and whether they would apply to critical minerals. Trump in the past has said his administration would apply tariffs upwards of 60pc on all US imports from China and a 20pc tariff on imports from the rest of the world to protect American manufacturing. But this also runs the risk of driving up inflation.
Minor metals trading firms are hopeful that exceptions will be made for critical minerals and that Trump's plans could be watered down and take some time to implement.
"Knowing Trump, there will be a lot of negotiating and country blackmailing before the final list is established. I would also expect a lot of exceptions for critical metals that are needed for aerospace, military, space and other high-tech industries," a minor metals trading company told Argus this week.
"He certainly announced increased tariffs for several products of Chinese origin, but it could take months for any plan to actually be implemented," another market participant said, noting that they would take a more watchful approach rather than follow any knee-jerk reactions from the market.
In addition to higher prices for metals imported from China, the other major risk factor associated with a more intensified US protectionist policy is that China will ramp up retaliatory measures in the form of export restrictions on metals for which it holds a dominant supply position.
China has instituted export controls on gallium, germanium and antimony since the middle of last year, contributing to a dramatic surge in import prices for the latter two metals in the rest of the world. Supply of tungsten, a critical metal for the mining and aerospace industry, is also dominated by China, and it is widely viewed as the next most likely candidate for export controls.
If geopolitical tensions escalate, tungsten supply chains may attempt to relocate to countries that have better relationships with the US. "Countries such as Thailand and South Korea are going to get real busy," a US tungsten recycling company told Argus.
Meanwhile, the new US administration could benefit sectors that consume tungsten carbide, including energy and mining. "We will probably see more stability in mining projects in the US and a fast-tracking of permits for strategic metals," a supplier said. Faster permits could also boost the domestic production of antimony in North America, even though most products are still in the early stages of development.
Despite hopes that the new US administration could make some tariff exceptions for critical minerals, many such minerals are already subject to import tariffs in the US.
On 27 September, president Joe Biden's administration implemented 25pc tariffs on some chromium, cobalt, indium, tantalum and tungsten products imported to the US from China, despite strong opposition from stakeholders across the markets. All five of these metals were included in the US Secretary of the Interior's 2022 critical minerals list.
Furthermore, Trump previous administration imposed tariffs on 5,745 items in 2018, including but not limited to, battery metals such as nickel, cobalt, lithium and manganese, as well as key electronics and aerospace metals such as gallium, germanium, bismuth and certain tungsten products. Trump did make exceptions for antimony and rare earths at the time, which he removed from its initial tariff list of more than 6,000 items. Many of these tariffs started out at 10pc in September 2018 but rose to 25pc by May 2019, with mixed impacts.
The most recent wave of tariffs from the Biden administration prompted an uptick in demand from US consumers and trading companies between the announcement of the tariffs and their implementation.
In the first half of this year, Chinese exports of chromium to the US surged to 6,221t, up by 417pc from the same period a year earlier, as exporters rushed to get material on the water before the tariffs came into force and US chromium buyers sought to build stocks.
Likewise, US demand drove up exports of Chinese unwrought tantalum to 162t in January-August, more than doubling from 63t a year earlier, customs data show. The US is highly dependent on unwrought tantalum metal imported from China, with China's supplies accounting for more than half of its total imports in recent years.
But in the days immediately following Trump's win, US demand has remained steady. "I expect that only the people who are the most risk-prone or certain about the duties will want to stockpile this early," a trading firm said.
