The second round of the trade war, the domestic commodity market is "not calm"

On August 23, a new round of mutual tariffs between China and the United States came into effect. The two sides decided to impose a 25% tariff on the $16 billion product, which is the second round of sanctions after the first round of tariffs on the $34 billion product. So far, the two countries have expanded their tariffs to 50 billion US dollars.

In a brief statement issued by the Chinese Ministry of Commerce on the 23rd, it said that the US side has been bent on its own way. On August 23, under the 301 investigation, a 25% tariff was imposed on the US$16 billion imported from China, which is obviously suspected of violating WTO rules. "China is resolutely opposed to this and has to continue to make the necessary counterattacks. At the same time, in order to defend free trade and the multilateral system and defend its legitimate rights and interests, China will file a lawsuit against this taxation measure under the WTO dispute settlement mechanism." Ministry said.

According to the "Announcement on Adding Tariffs to Certain Goods Originating in the United States" issued by the Ministry of Commerce of the People's Republic of China, the Chinese side imposed a 25% tariff on US$16 billion in goods and officially implemented it at 12:01 on the 23rd. This list of tariffed goods to the United States and Canada covers 333 kinds of products, including coal, PTA, plastics, asphalt, steel, non-ferrous metal waste and other commodities.

The new round of tariffs has been digested by market expectations.

According to the reporter of the Futures Daily, after the two sides’ mutual tariffs came into effect on that day, the domestic commodity market did not appear to have a large market. In this regard, Wang Ruiran, deputy director of the Jinrui Futures Research Institute, said that this is mainly due to the fact that China’s list of US$16 billion tariffs imposed on the United States was completed as early as August 8, so the market has already implemented this tariff. Very full expectations, the possibility of panic emotions is less likely. Moreover, most of the goods in China's tariff list on the United States and Canada account for a small proportion of total imports, which can be replaced by other countries. From this, we can see that our policy formulation is very rational.

He said that the impact of Sino-US trade friction on China and the global economy has begun to become dominant. China has already adjusted relevant policies to increase its resistance to external shocks, and it also shows our confidence. "If the United States continues to expand the scope of taxation, it will put a lot of pressure on the global economy and will eventually spread to itself. The minutes of the Fed meeting just released show that trade conflict has become an important source of risk for the United States, and opposition from the new round of hearings. It is also very high. Based on this, we estimate that the short-term trade war is unlikely to be significantly upgraded. Dialogue and negotiation are still the most effective ways to solve the problem."

Pu Honggang of Xiamen International Trade Group said that this mutual tariff action is the remainder of the first round of China’s counter-US US$50 billion tariff increase list, covering major projects including various types of vehicles ($8.588 billion) and fossil fuels ($3.747 billion). ), metal scrap (mainly including about 2.9 billion US dollars of scrap aluminum, scrap copper), medical equipment (17.04 billion US dollars) and so on. He believes that the negative impact of current Sino-US trade friction has not been significantly revealed. According to domestic data, domestic exports increased by 12.2% year-on-year in July, except for the low base. Part of the reason was that exports were moved forward due to concerns about trade wars, showing an increase of 11.2% in exports to the US and a one-month surplus. To $28.089 billion. However, he said that as the tariff policy of China and the United States continues to fall, the impact of trade conflicts on the Sino-US economy will gradually emerge.

At the same time, he told reporters that the current coking coal, PTA, plastics, petroleum asphalt and steel, copper, nickel, aluminum, zinc, tin scrap and other commodities involved in the tariff list of China are very small in China's total imports. The impact on prices is very limited. And he also mentioned that this list of tariffs has already been announced on August 8. The changes in the futures market have already reflected this impact, so everything needs to be looked back. It is necessary to observe the new round of consultations between China and the United States. the result of. "Once the negotiations between the two sides are not smooth, the United States will determine the additional tariffs of 200 billion US dollars of goods, and the negative impact on the Chinese economy will be further revealed. The probability of industrial product prices will fall with the economic downturn."

Everbright Futures analyst Dapeng also told reporters that the $16 billion tariff imposed by China and the United States in this round is part of the $50 billion tariff increase list on June 15 and is under Trump’s tough attitude. The market is already expected. "At present, the focus of the market has gradually been placed on the negotiation of the next 200 billion US dollars of goods. From Trump's consistent style, the market expects that the situation will not be particularly optimistic until the Sino-US summit in November."

At present, the United States will issue a $200 billion tariff on China, and the time will continue until August 27, the United States, which is next Tuesday morning. Judging from the current situation of the hearings, most of the representatives opposed the tariffs and believed that the continued increase in tariffs on China would harm the interests of the United States. In addition, the just-released minutes of the Federal Reserve’s August meeting showed that all members considered trade to be an important source of uncertainty, and large-scale and protracted trade disputes could have a negative impact on business confidence, investment and employment.

Tariffs have little impact on domestic commodity markets

Wang Siran told reporters that the main game focus of the domestic commodity market is focused on environmental protection, inflation expectations, emerging market crisis and adjustment of domestic monetary and fiscal policies. He said that the impact of the current trade friction has been fully priced, and if the follow-up is no longer expanding, the market will face the expected repair. “Especially for colored varieties, because it is the most international variety, it is the most affected by trade friction, but the current color represented by copper is already in pessimistic expectations. If it does not continue to deteriorate, it may appear to be repaired. rise."

Haitong Futures analyst Li Chao said that from the microscopic point of view, domestically imported electrolytic copper from the United States only accounts for a small proportion of total imports, while scrap copper is relatively more. However, due to the stricter domestic policy on the prohibition of scrap copper imports, and the current domestic fine waste price difference is very small, the import profit is meager, so the late scrap copper import volume may decline further, which is more conducive to refined copper consumption, but the impact of consumption substitution is limited. Overall, he believes that this part has little impact on the domestic market, and the market's light response is mainly because the expectations have been digested. Today, only tariffs are implemented, and to some extent, short-term negatives have been released.

At the same time, he said that the current study of copper prices should be analyzed from a macro perspective. “Copper is a leading indicator of global demand. The Sino-US trade war has continued to ferment from the beginning to the present, leading investors to have pessimistic expectations for future global economic growth, which has led to a sharp drop in copper prices. Futures prices depend on investors for the future. It is expected that if the current fundamentals are used to analyze future prices, it may cause bias. In this regard, he proposes to analyze the long-term nature of Sino-US trade wars and the impact that the future may have on global economic growth.

According to SMM's analysis, in terms of copper, China's imports of copper from the United States accounted for 1.3% of China's total imports in 2017, and copper concentrates 2.5%. Anode copper and electrolytic copper are basically negligible. In the list of US$16 billion traded in China, mainly in scrap copper, China imported 535,000 tons of scrap copper from the United States in 2017, accounting for 15% of China’s imports, so this implementation will benefit domestic refined copper consumption in a certain period of time. .

For aluminum, the scrap aluminum scrap involved in the 16 billion tariff list has already imposed a 25% tariff on April 2, which has greatly reduced the total amount of domestically imported scrap aluminum. After the increase of tariffs, the amount of imported aluminum in China from April to June was 130,000 tons, 110,000 tons, and 110,000 tons, respectively, and the monthly import volume decreased by about 40%. It said that the scrap aluminum was mentioned again in the list of 16 billion goods. It is not clear whether it is a superimposed double addition. But whether it is or not, the impact will be relatively limited. "At present, the legal channels for importing scrap aluminum are still exempted from tariffs through processing of imported materials, while a small amount of re-exports to Japan and other countries have less domestic waste aluminum. Therefore, the overall tariff increase has less impact on scrap aluminum."

According to the reporter of the Futures Daily, for the zinc scrap waste involved in the 16 billion, the amount of zinc waste imported from China is relatively small, and the import volume from the United States is smaller, and the marine debris involved in the previous years is not allowed to enter the domestic inclusion. Zinc waste. Therefore, SMM believes that this tariff increase has less impact on zinc. For the nickel scrap waste involved, it means that the total amount of nickel waste scrap imported from China is very small. In 2017, China imported only 8 tons of nickel waste and scrap, and the import volume from the United States was negligible. In addition, the same is true for the tin scrap involved. According to customs data, from May 2017 to April 2018, tin scrap imported from the United States was only 261 tons, so SMM believes that the impact of the tariff increase on the tin market is very limited.

Regarding the impact on domestic energy-producing commodities, Mr. Yan Mingzhi, head of the research group of Hongze Research, still maintains the previous judgment: “The imposition of tariffs does not affect the total amount, but affects the source structure of imports; at the same time, most of the chemicals The proportion directly from the United States is not large, and more performance is the impact on the market sentiment mentality."

For crude oil and bitumen, it can be observed that North American crude oil flows more to India and other regions, while China has increased imports from Africa, Iran and other regions to fill vacancies. In the future, there will be some changes in the logistics pattern of crude oil. In the short term, there will be some concerns about the demand for crude oil in North America, but there is no substantial impact on the global crude oil balance. In terms of asphalt, the import volume from the United States in 2017 was only 400 tons, while the overall import volume was 5 million tons, which was negligible.

Looking at the polyester industry chain, in terms of ethylene glycol, the import volume in 2017 was 200,000 tons, accounting for 2.3% of the total annual imports, accounting for 1.4% of the total apparent demand. According to previous understandings, imports from North America are more affected by the elasticity of internal and external price differences, and there is no rigid long-term lock--the large foreign MEG supply is global distribution, so it is easy to avoid the impact of tariffs; In terms of PTA, due to the serious price hung on internal and external discs, domestic imports are currently close to zero, and the impact is negligible. In terms of waste polyester, because the country has previously announced an import ban, it has no effect.

In terms of polyethylene (PE), the initial taxation is LDPE, and this adjustment is LLDPE+HDPE. The direct impact of this tariff increase is to delay the impact of new capacity in North America on the domestic market, or the impact of the increase in domestic imports by extruding other market shares in the future. The short-term market import increase is expected to further fall over.

In terms of polypropylene (PP), the main impact on PP is propane. Propane imports 13.35 million tons in 17 years, of which 3.37 million tons are imported from the United States, and imports account for 25%. The 25% tariff increase raises the cost of PDH to propylene by more than RMB 1,000/ton, but it is believed that mainstream importers in China can avoid risks through the exchange of overseas traders.

In terms of methanol, there is currently only a proposed case, and the taxation time has not yet been officially announced. From the data point of view, 17 years of imports of methanol in the United States 80,000 tons, the total import volume of 8.13 million tons, accounting for 1%.

Finally, PVC, before the initial taxation includes PVC, this adjustment temporarily removes PVC, PVC still has anti-dumping. In the past 17 years, PVC is still the main exporter. Imported US PVC is about 300,000 tons, and imports account for 27%, but most of them are mainly processed and not affected by tariffs.

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