How Have Trade Tariffs Impacted Commodity Prices?

There are significant headwinds for commodity prices - and the mining stocks that are dependent on them

Morningstar Equity Analysts 2 July, 2018 | 12:32AM

commodities natural resources Trump trade tariffs basic materials

The Trump administration's imposition of steel and aluminium tariffs made waves early in 2018, driving share prices for steel and aluminium producers sharply higher. Although we've increased our forecasts for near-term U.S. steel prices and the U.S. Midwest aluminium premium, we maintain a negative long-term outlook for both industries.

We expect substantial global overcapacity will cause most industrial metals companies to fall short of earning their cost of capital over the decade to come. Additionally, with the tariff programme now in place, we contend that all near-term positive catalysts have now been exhausted and we see asymmetrical downside risk due to our outlook that both steel and aluminium prices will decline materially in the years to come.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Rio Tinto PLC4,669.50 GBX-1.07

About Author

Morningstar Equity Analysts  Morningstar stock and fund analysts cover 2,000 mutual funds, 2,100 equities, and 300 exchange-traded funds.

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