Beijing to retaliate, boost spending after US tariffs
China said it will retaliate against another round of US tariffs and plans to increase infrastructure spending to offset negative effects of their growing trade war.
The US will impose a 10pc tariff on an additional $200bn/yr of imports from China on 24 September and increase the rate to 25pc from 1 January.
"In order to safeguard its legitimate rights and interests in the global trade system, China will have to retaliate," China's commerce ministry said. "The US insists on imposing tariffs, which brings more uncertainty to the negotiations between both sides. We hope that the US will recognise the negative consequences of its actions and take convincing measures to correct them in a timely manner."
China did not announce countermeasures but has said it will add tariffs on $60bn of imports. These duties could hit US exports of LNG, chemicals and metals.
Beijing is seeking to accelerate construction of existing and new infrastructure projects and asked local governments to utilise funds worth 1.35 trillion yuan ($197bn) to support infrastructure construction.
Beijing has cleared proposals for investment in all planned projects for this year by end of May, the fastest rate of projects clearance in recent years, which has helped construction to begin early for several projects, said Chinese economic planning agency the NDRC today.
The central government had allocated around $78bn for infrastructure investments for 2018 at the beginning of the year. Banks and local governments can float bonds totalling Yn1.35 trillion to support infrastructure projects.
Beijing is also deepening reforms of project clearance system to cut the time for planned infrastructure investments to start construction. The infrastructure speed-up announcement supported market sentiments, with the most active iron ore contract on the Dalian commodity exchange rising by 1pc and the Shanghai futures exchange rebar contract up by 1.4pc.
The NDRC did not mention any linkage of the accelerated progress of projects and the escalating tariff friction with the US. But a swifter project implementation will shore up economic growth and partially buffer against the fallout of a higher tariff on Chinese exports. Beijing has said it will announce its response to the US announcing a fresh 10pc tariff on Chinese imports worth $200bn at an appropriate time.
China's infrastructure investment growth fell to 4.2pc during January-August from 19pc in 2017. The NDRC had earlier pointed to initial problem in public-private partnership projects and closer scrutiny of project viability and rising provincial debt levels as reasons for slower growth. Projects that have financial appeal for private-sector companies will be promoted for developing public-private investment projects and norms for these are being clarified and streamlined further, said the NDRC. But vanity projects without clear social purpose will still not be allowed to be built, it added. Among projects currently under construction are water conservation projects, railway networks and airport expansions.
Related news posts
EU HRC market gears up for mill consolidation
EU HRC market gears up for mill consolidation
London, 19 September (Argus) — The European hot-rolled coil (HRC) market is gearing up for potential consolidation over the coming year, as mills grapple with tough market conditions. The share prices of key European producers have rallied in recent days, despite continued weakness in HRC prices. Global steelmaker ArcelorMittal's shares traded above €22/share ($24/share) on the Luxembourg Stock Exchange at 12:30 GMT today, up from €19.70/share on 10 September. This strength is partly attributable to the expected release of economic stimulus measures in China, and the US Federal Reserve's recent interest rate cut, sources suggest. But market strength could also be because of growing talk that a new wave of consolidation is on its way, fuelled by decarbonisation efforts and the strained positions' of some mills. There has long been talk that steel coil producer Tata Steel Netherlands could be sold, after the Dutch state agreed to contribute to its decarbonisation spend. Recent difficulties at Germany's ThyssenKrupp have also sparked suggestions it could be an acquisition target. Czech Republic energy company EP Corporate Group (EPCG) recently completed its purchase of a 20pc stake in ThyssenKrupp's Steel Europe division, and could increase this to 50pc in the near future. EPCG owner Daniel Kretinsky may be seeking a strategic partner to help run the business, sparking talks that other mills could bid for a stake in the company. ThyssenKrupp shares were trading at €3.20/share on Deutsche Borse Xetra at 12:30 GMT today, up from €2.78/share on 10 September. Concerns over strong positions in niche markets, particularly tin plate, saw Tata Steel and Thyssekrupp call off their proposed joint venture in May 2019. But the market is in a different position now. Some mills have reduced capacity but new entrants are trying to join the market as green producers. And the global market is oversupplied, putting European producers in a difficult financial predicament, especially given their capital-intensive efforts to decarbonise. In the case of ThyssenKrupp, expectations that the mill will reduce its production footprint could partially alleviate potential competition concerns in the event of a takeover. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Fed cuts rate by half point, signals more: Update
US Fed cuts rate by half point, signals more: Update
Adds chairman Powell comments, economic projections. Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with policymakers signaling they expect to make another half-point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a 23-year high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most intense rate-tightening campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc, and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." In their latest economic projections, the Fed board and policymakers expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. Policymakers also penciled in another 100 basis points of cuts over the course of 2025. "We're recalibrating policy down over time to a more neutral level and we're moving at the pace that we think is appropriate given developments in the economy," Fed chair Jerome Powell told a press conference after the meeting. "The economy can develop in a way that will cause us to go faster or slower. The US economy is in a good place and our decision today is designed to keep it there." The Fed's economic projections see core Personal Consumption Expenditures inflation — the Fed's favorite measure of inflation — ending 2024 at a median rate of 2.6pc, down from a prior forecast of 2.8pc. Policymakers see core PCE inflation falling to a median of 2.2pc by the end of next year. The outlook for the unemployment rate for the end of 2024 climbed to 4.4pc from 4pc penciled in at the June meeting. Policymakers expect gross domestic product (GDP) growth to end 2024 at an annual 2pc, slightly down from a prior 2.1pc projection. The latest policy meeting comes as the Consumer Price Index (CPI) eased to an annual 2.5pc in August , down from 2.9pc in July, the Labor Department reported on 11 September. Inflation had ticked up to 3.5pc in March from 3.1pc in January, prompting the Fed to turn more cautious about beginning its rate cuts. US job growth has recently slowed sharply, falling to an average 116,000 in the three months through August from 211,000 for the prior three months. The jobless rate rose to 4.3pc in July, the highest in three years, before edging down to 4.2pc in August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Fed cuts rate by half point, signals more to come
US Fed cuts rate by half point, signals more to come
Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with officials signaling they expect to make another half point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a two-decade high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most aggressive increase campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." The Fed board and policymakers, in their latest economic projections, expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan's Tokyo Steel cuts sales prices on weak demand
Japan's Tokyo Steel cuts sales prices on weak demand
Shanghai, 18 September (Argus) — Japan's steel manufacturing firm Tokyo Steel said it will cut domestic steel product prices for October, marking the first full-scale price cut in over four years. The decision was driven by sluggish domestic demand and increased competition from cheaper imported steel products. Tokyo Steel will reduce prices across all product lines starting October, with steel coils and plates dropping by ¥15,000/t, shaped beams by ¥12,000/t, and tubes and deformed bars by ¥10,000/t. The company had maintained stable domestic steel prices for an extended period on the back of the steadier domestic demand and market conditions compared to the more volatile overseas market. The last price cut for deformed bars was in July 2023. Steel sales in Japan were weak during the third quarter, impacted by rising procurement costs for materials, a shortage of construction capacity, and an influx of cheaper steel products from China in the seaborne market, market participants said. A decline in profitability pushed Japanese mills to cut production costs. From 11 July to 14 September, domestic scrap prices at Tokyo Steel's Utsunomiya plant dropped by ¥12,500/t, or 23.8pc. Market sentiment in Japan remains bearish due to economic uncertainty and the strengthening of the Japanese yen. The upcoming adjustments in US monetary policy could add further volatility to exchange rates. "We may see more corrections in the Japanese domestic market," a trade source said. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more