BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR COOKIE NOTICE
X
Skip Navigation LinksHome|News & Analysis|News Features|News Feature Detail

Print

Canada, EU, Mexico to be subject to US metals tariffs



Factbox: EU energy markets fear US trade war impact



June 1, 2018 - Energy markets may have overreacted to US imposed tariffs on steel and aluminum imports from the EU, but traders fear a trade war escalating and hitting demand.


However, the overall long-term impact on industrial energy demand in the 28-nation economic block could be limited because of the modest scale and efficiency of the industry compared with major producing nations such as China.


"We don't expect the tariffs to majorly affect us but it might change if GDP or trade flows are impacted," a European trader said.


European energy prices were hit following US President Donald Trump's decision on Thursday to impose 25% tariffs on steel imports from Canada, Mexico and the EU.


In 2017, EU steel exports to the US totaled 4.9 million mt or 3% or its total production. Aluminum exports were just 28,831 mt or 0.4% or aluminum production.


However, fears of a broader trade war with the US should the EU retaliate have sent a bearish signal to the carbon and electricity markets going forward. Lower industrial demand from falling exports to the world's largest economy would be hard for energy traders in Europe to ignore as a longer-term risk.


CARBON


EU Carbon Allowance futures prices fell as low as Eur14.82/mt on Thursday, down from the previous close of Eur15.84/mt -- the largest single-day fall for carbon in more than a year. The contract had hit a seven-year high at Eur16.59/mt on Tuesday.


POWER


European benchmark German year-ahead power prices fell Eur1.50 on Thursday to close at Eur40.40/MWh, data from EEX showed. The equivalent French contract fell 83 euro cent on the day to settle at Eur45.95/MWh before losing a further 30 cent by midday Friday.


The UK power curve followed a similar trend, with the July base heard traded at GBP55.15/MWh, down from the previous day's GBP56.25/MWh. Winter-18 base fell to GBP60.80/MWh down 30 pence on the day.


NATURAL GAS


On the European day-ahead gas contracts, Dutch TTF spot price for Monday June 4 delivery fell 57.5 euro cent. The contract was trading at Eur21.90/MWh on Friday afternoon, with the corresponding NBP contract at 56.75 p/th, down 2.05 p/th.


While one Denmark-based trader said he saw at least a further Eur1/MWh of potential downside in the TTF market, others were more skeptical, saying that the overall impact on European gas prices would be minimal.


COAL


European thermal coal prices followed the downward trend of the broader European energy complex, but sources said they did not expect prices to be directly affected by the tariffs.


"It's hitting the macro/broader energy complex, and coal is seeing the effects from that," a trader at a European utility said.


The CIF ARA 6,000 kcal/kg NAR Cal-19 contract opened up $1 Friday morning but drifted lower during the afternoon, trading at $86/mt, down 65 cents on the day.


POWER DEMAND


The main energy input used in the production of aluminum in Europe is electricity. Platts analysis indicates the impact on power demand will be marginal. Energy use for steel and aluminum from EU exported to the US has been estimated by Platts at 3 TWh, or about 1% of 2017 electricity demand. The European electricity mix is made up by Nuclear (27%), Gas (20%), Coal (19%) and the rest from renewables, hydro, wind, solar and biomass.


KEY EUROPEAN STEEL AND ENERGY STATS (2017)


Steel exports to US (million mt)
Energy in steel exports (TWh)
Electricity demand (TWh)*
Steel Production (million mt)
Germany
1.3
0.7
654
43.6
Netherlands
0.7
0.3
98
6.8
Italy
0.5
0.3
285
24
Spain
0.3
0.2
265
14.5
UK
0.3
0.1
336
7.5
Rest of EU
1.8
0.9
1430
72.3
EU
4.9
2.5
3068
168.7
Source: World Steel Association, Entso-e, Eurostat, national electricity TSOs, Platts
Note: assumed energy intensity 0.5 TWh/million mt of steel, 2016* figure


KEY EUROPEAN ALUMINIUM AND ENERGY STATS (2017)

EU exports to US (mt): 28831
Energy in Aluminum export (TWh): 0.45
Electricity in Aluminum export (TWh): 0.39
Europe Production ( million mt): 7.78;
Source: IAI, Platts


--Staff, newsdesk@spglobal.com
--Edited by Jonathan Dart, newsdesk@spglobal.com



Platts Global Energy Briefing
June 13, 2018 • London Hilton • London, United Kingdom

Sessions include panel discussions on:

• Crude, oil products, refining and the bunker specification change
• Global gas, LNG and power markets today and tomorrow

View the full agenda and register




CANADA, EU, MEXICO TO BE SUBJECT TO US METALS TARIFFS

Any US car tariff would push Japanese metal prices down: analysts Analysis: Steel mill spreads in China, US hit records in May Global long steel market outlook stable amid continued uncertainty: IREPAS European hopes of US steel tariff exemptions diminishing EU steel demand to grow in 2018, deflected imports a threat: Eurofer Mexico submits formal complaint to WTO over US metals tariffs Record pace of US steel scrap exports to Mexico could be derailed Canada, EU submit formal complaint to WTO over US metals tariffs European Commission responds to US tariffs by applying rebalancing duties US senators to introduce bill to limit Trump's tariff authority: report Three US mills object to NLMK USA's steel slab exemption requests Mexican steelmakers suspend exports to the US: sources Mexico imposes tariffs on US steel, farm imports US sheet market still analyzing steel tariffs on NAFTA, EU US tariffs to cost Mexican steel industry $2 billion/year: Canacero Factbox: EU energy markets fear US trade war impact Impact on European aluminum market from US tariffs moderate: sources Trump administration targets allies after Section 232 investigations Canada, EU, Mexico to be subject to US metals tariffs from June 1 Mexico to impose tariffs to US products; follows US move on Section 232 protection Responding to US steel tariff, Eurofer calls on EC to ensure access to global trade Canada calls US steel, aluminum tariffs 'unacceptable,' takes steps to retaliate US steel tariffs 'hitting wrong target': House Ways and Means chairman EU to launch legal proceedings against US steel and aluminum duties on June 1 No justification for steel, aluminum tariffs on Canada: USW US Grain Council says US metals tariffs to hurt American agriculture Oil and gas sector worries of accelerating impacts as White House expands steel tariff reach Newest steel tariffs could undercut chemical projects: ACC US flat-rolled market gets jolt from new steel tariff news

Related Products & Events

Platts Daily Briefing




Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.