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US under Trump Series: Trump’s steel executive order likely to hurt iron ore

The President of the United States Donald Trump has used a 1962 law to sign an executive order to launch an investigation with gives the department of commerce to assess, whether importing steel, which has both civilian and military applications threaten national security or not. Mr. Trump said that it is a historic day for American Steel but he insisted that the executive order is not aimed at China, which is the largest global producer and importer of steel. Mr. Trump said, “Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries.”

President Trump’s commerce secretary Wilbur Ross said that the investigation can be completed well before the timeline of 270 days. Mr. Ross said the administration was concerned that rising steel imports were threatening US industry and its ability to respond quickly to national security needs.

This new executive order is of utmost importance for foreign steel companies as the Trump administration plans to reveal its trillion dollar infrastructure plans.

While the executive order opens the path to measures against foreign steel imports, it is not likely to change the net demand immediately. However, the order is still not a good one for Iron ore, which is the most important steel making ingredient. China is the biggest producer of steel and the biggest consumer or iron ore. The order will eventually lead to slower exports for Chinese steel, which has a market share of almost 26 percent in the US import market. The ripple effects in the Chinese economy would eventually lead to the lower domestic demand of steel.

The price of Iron ore has declined more than 20 percent since March and is currently trading at $70.9 per ton. It is likely to slide down further.

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June 28 15:30 UTC Released

BRForeign Exchange Flows*

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-5.279 bln

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-3.401 bln

June 28 14:30 UTC Released

BRBank Lending MM*

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-0.2 %

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-0.2 %

June 28 19:00 UTC 189189m

ARBank Lending MM*

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1.9 %

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0.8 %

June 28 21:00 UTC 309309m

KRBOK Manufacturing BSI*

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82 bln

June 28 23:50 UTC 479479m

JPForeign Bond Investment

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2.6 bln JPY

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3.2 bln JPY

June 28 23:50 UTC 479479m

JPForeign Bond Investment

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1090.1 bln JPY

June 28 23:50 UTC 479479m

JPForeign Invest JP Stock

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-331.6 bln JPY

June 28 23:50 UTC 479479m

JPForeign Bond Investment

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Previous

1090.1 bln JPY

June 28 23:50 UTC 479479m

DERetail Sales YY

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2.6 %

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3.2 %

June 28 23:50 UTC 479479m

JPForeign Bond Investment

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Forecast

Previous

1090.1 bln JPY

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