US aluminium and steel prices surge as Trump doubles tariffs
[LONDON] Futures tracking aluminium and steel prices in the US surged after President Donald Trump said he will double tariffs on the metals this week.
Contracts linked to the prices that manufacturers pay to get aluminium delivered to the US Midwest jumped 54 per cent to the highest since 2013 on the Comex exchange in New York on Monday (Jun 2) – offering an early glimpse of the much higher costs for American factories, with import levies set to rise to 50 per cent from Wednesday.
Aluminium used in everything from beer cans to engine blocks and window frames was priced at a premium of 58 US cents a pound, or about US$1,280 a tonne, in the Midwest over benchmark London contracts. That suggests US buyers could end up paying about 50 per cent more than international competitors to get hold of the metal.
Trump hopes the increased levies will protect margins for domestic mills and spur investment in new production capacity, and shares of US steel and aluminium makers surged in after-hours trading after the announcement on Friday. But construction companies have warned that levies on steel and aluminium – which Trump had already raised from 10 to 25 per cent – will increase the cost of critical building materials.
Comex steel futures were up more than 8 per cent before paring some of the gains on Monday – and while both contracts are relatively illiquid – the moves indicate that the commercial burden of the tariffs will weigh most heavily on the US aluminium market. More than 80 per cent of the aluminium used in the US is supplied via imports, while less than 20 per cent of the country's steel is sourced from overseas, according to Morgan Stanley.
'We expect prices to rise – the US does not have enough domestic capacity of either,' analysts at Citigroup said. For aluminium in particular, the tariffs have 'mostly just functioned as a tax on consumers thus far'.
Benchmark aluminium contracts on the London Metal Exchange (LME) traded 0.9 per cent higher to settle at US$2,466 a tonne at 5.50 pm local time. Copper was up 1.2 per cent in London and nearly 4 per cent higher on Comex, as analysts said the heightened levies make it more likely that Trump will follow through with plans to place tariffs on the metal.
'The market also appears to be pricing a higher likelihood of copper tariffs, with Comex outperforming LME,' Morgan Stanley analysts led by Amy Gower said, noting that US buyers have been front-loading imports ahead of potential tariffs. 'For now, the Comex premium is likely to continue pulling material to the US, drawing down ex-US inventories and keeping ex-US markets tight.' BLOOMBERG
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Straits Times
21 minutes ago
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South Korean new President Lee Jae-myung (centre) and his wife Kim Hye-kyung after attending the Presidential Inauguration at the National Assembly in Seoul, on June 4. PHOTO: EPA-EFE – Freshly minted South Korea President Lee Jae-myung has hit the ground running, just hours after winning the snap election of June 3. And among the many urgent matters awaiting him is to get the attention of his American counterpart Donald Trump. Officials from Washington and Seoul are hurrying to set up a congratulatory phone call between Mr Trump and Mr Lee to happen as early as June 5, which would, hopefully, serve as a precursor to a face-to-face meeting in the near future. Local media reported that the two possible windows for a Trump-Lee meeting could be at the Group of Seven Summit in Canada from June 15-17, and the Nato summit set for June 24-25 in the Netherlands, both of which South Korea has been invited to attend. Mr Lee's first day in office on June 4 coincides with Washington's deadline for trading partners to submit their 'best proposals' to the table, ahead of the July 9 expiry of the 90-day pause on reciprocal tariffs. The doubling of steel and aluminium tariffs from 25 per cent to 50 per cent by the United States also took effect from June 4, and South Korea was among the countries hit. Speaking on a radio show on the eve of the election, Mr Lee had expressed confidence that he and his team would be able to reach 'compromise and adjustment in a way that benefits both sides' with the US , even putting aside his dignity when speaking to Mr Trump, if need be . 'If that is the way powerful countries operate, we must overcome it. If it's necessary, I'll even crawl under (Mr Trump's) legs. What's the big deal?' he quipped. Mr Lee, a former human rights lawyer, was sworn into office at 9am (10am in Singapore) on June 4, barely five hours after the final vote tally gave him a 49.42 per cent mandate. His closest rival, former labour minister Kim Moon-soo, garnered 41.15 per cent. The snap election Mr Lee, 61, won was widely seen as a referendum of his disgraced predecessor Yoon Suk Yeol's failed self-coup of Dec 3, 2024. Yoon was subsequently stripped of his powers by the country's Constitutional Court and is now undergoing trial on insurrection charges. Mr Lee inherits a burning portfolio following six months of political chaos left by Yoon's short-lived martial law debacle. The new President has acknowledged that beyond the uphill task of healing a fractured and wounded nation, a key priority for him would be to regain the trust of its biggest ally, the US, and to iron out urgent trade issues. Data released on June 1 by the South Korean government have shown that the country's economy has started to slow down following Mr Trump's announcement of various tariffs since April 2 . South Korean exports fell 1.3 per cent from a year earlier, with steel exports, in particular, falling by 12.4 per cent. South Korea was the fourth-largest exporter of steel to the US last year. Amid the uncertainties, the Bank of Korea on May 29 slashed the country's economic growth forecast for 2025 to 0.8 per cent, from its previous estimate of 1.5 per cent. The previous administration had begun talks with its Washington counterpart in seeking a full exemption from or reduction in the proposed 25 per cent reciprocal tariffs on South Korea, in addition to reduction in sectoral tariffs on steel, automobile and other imports. The previous government had repeatedly stressed the final push had to be done by the new administration from June 4. 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A recent Wall Street Journal report on May 22 about the US plans to reduce its military presence in South Korea had sparked fears about what it means for Washington's security commitments in the troubled Korean peninsula. There had also been concerns that South Korea, under Mr Lee's liberal-leaning stewardship, might worsen matters if it pivots towards China at the expense of the South Korea-US alliance and the US-Japan-South Korea trilateral partnership. Mr Lee had been perceived as 'pro-China' for his previous xie-xie gaffe where he had suggested in March 2024 that South Korea remain a neutral party in the cross-strait tensions between China and Taiwan. In the run-up to the country's general election in 2024, in an attempt to disparage then President Yoon's tightening alliance with the US and Japan, which had invited criticism from China, Mr Lee had said that Seoul could avoid antagonising Beijing further, especially over Taiwan Strait tensions, by simply saying xie xie, or 'thanks' in Mandarin, to China and Taiwan. But the new President has repeatedly sought to dispel such a notion. In his inaugural address on June 4, Mr Lee emphasised that he would seek a 'pragmatic' approach to diplomacy, and 'turn the crisis of global economic and security shifts into opportunities to maximise national interests'. He also pledged to strengthen the US-South Korea alliance, bolster the US-South Korea-Japan trilateral partnership, while improving relations with both China and North Korea, which he described as being in the 'worst state' because of the last administration. 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Bush Foundation for US-China Relations, told The Straits Times that the new Lee administration's foreign policy directions bear watching. 'Today's North Korea differs from past iterations, as does China,' said Dr Lee. 'South Korea's domestic turmoil over the past six months may have created an inward focus that underestimates these seismic geopolitical shifts, so simply reverting to old foreign policy paradigms may prove inadequate when major powers are redrawing their grand strategies.' Wendy Teo is The Straits Times' South Korea correspondent, based in Seoul. She covers issues concerning the two Koreas. Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
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Straits Times
34 minutes ago
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Continuity or reset? Japan, China seek clues to S. Korea President Lee Jae-myung's foreign policy
South Korean President Lee Jae-myung speaking during a media conference at the Presidential Office in Seoul on June 4. PHOTO: REUTERS – South Korea's East Asian neighbours Japan and China on June 4 quickly congratulated President Lee Jae-myung on his resounding election win, even as both countries are closely watching for clues to how the liberal leader will approach bilateral relations. This scrutiny stems from perceptions that South Korean diplomacy oscillates wildly depending on the ruling party of the day. Liberals are judged to be hostile towards Japan and friendly towards China and North Korea, while conservatives hold an opposite view. Ties between Tokyo and Seoul plunged into a deep freeze under the previous liberal President Moon Jae-in, only to thaw rapidly under Mr Lee's ousted predecessor, Yoon Suk Yeol, who is now facing insurrection charges for his martial law debacle. Mr Lee had previously described Japan as an 'enemy nation' and gone on a 24-day hunger strike to oppose Yoon's conciliatory policies, which he termed 'humiliating diplomacy'. He has also criticised Yoon for worsening ties with China by moving closer to the United States on positions such as Taiwan, which Beijing regards as part of its territory to be reunited with. But Mr Lee adopted a more centrist agenda on the campaign trail, saying that he wanted to repair fraying ties with China, while also insisting that he held a 'very favourable impression of the Japanese people'. His approach to this diplomatic tightrope will have ramifications from Washington to Tokyo, as the US corrals its Indo-Pacific allies for support in its big-power competition with China. Both Japan and South Korea are US security allies, while China is their largest trading partner. On June 4, Mr Lee said : 'I will strengthen cooperation between South Korea, the US and Japan, based on the solid South Korea-US alliance, and will approach relations with neighbouring countries from the perspective of national interest and practicality.' All eyes will be on Mr Lee's likely diplomatic debut on June 15 at the Group of Seven (G-7) summit in Canada, where South Korea has been invited as an obser ver. There, he could potentially meet bilaterally with US and Japan's leaders. Amid the diplomatic ambiguity, analysts in China were sanguine about Beijing-Seoul ties, while Japanese observers were more circumspect over Tokyo-Seoul relations. In a congratulatory message to Mr Lee, Chinese President Xi Jinping stressed that he attaches 'great importance' to China-South Korea relations. The two countries, he said, are close neighbours and partners that have overcome ideological and social differences in the 33 years since establishing diplomatic ties to develop stable and healthy relations. This partnership 'not only improved the well-being of the citizens in both countries, but also promoted regional peace and stability', Mr Xi added, according to state media reports. 'China is willing to work with South Korea to adhere to the original intention of the establishment of diplomatic ties and firmly follow the rules of good neighbourliness and friendship,' Mr Xi said, noting that this is to the benefit of both countries at a time of growing regional and international uncertainty. Over in Tokyo, Japanese Prime Minister Shigeru Ishiba delivered a similar message of working together as 'partners' and close neighbours to tackle global challenges, as the countries celebrate the 60th anniversary of bilateral ties in 2025. 'The importance of holding summit talks at an early date and engaging in 'shuttle diplomacy' won't change,' Mr Ishiba said, referring to the practice of the leaders regularly visiting each other's countries, while expressing his hopes to 'further invigorate bilateral exchanges' at all levels. Yet, Japanese officials are wary that Mr Lee's election would portend a dramatic shift in bilateral ties, given that he has said he would broach wartime issues over Japan's colonial rule of the Korean peninsula from 1910 to 1945, and the territorial dispute over the Dokdo/Takeshima islets. This is especially since 2025 marks the 80th year since Japan's wartime surrender, an anniversary year that could be weaponised to stoke tensions by raising historical grievances. Japan's position is that all wartime reparations have been 'completely and finally' settled under a 1965 agreement to normalise ties, with Tokyo paying US$500 million (worth about US$5 billion today, or S$6.4 billion) in grants and low-interest long-term loans to South Korea. But past South Korean administrations have repeatedly brought up historical issues, including comfort women and wartime labour, casting a pall over bilateral relations. 'Even if the administration takes a conciliatory stance towards Japan at the start, it could gradually evolve into a hardline stance towards Japan,' a Japanese Foreign Ministry official was quoted as telling the Mainichi newspaper. Another official was cautiously optimistic, saying it would be foolhardy to stoke anti-Japan sentiment at this time, given the positive public opinion. North Korea's military involvement in Russia's invasion of Ukraine also means that geopolitical calculations would have changed, the official was cited as saying. Kobe University's Professor Kan Kimura told The Straits Times that the way forward is unpredictable, given that invoking history would be a non-starter for Japan. 'Lee's language over history and territorial disputes is going to be provocative,' he said. 'The question is whether both countries can delink history with economic and security issues.' He saw it in Seoul's interests to maintain close ties with Tokyo, saying: 'Given that South Korean public opinion towards China is worsening, North Korea is refusing to engage in dialogue with South Korea, and the US is exerting pressure including through tariffs, objectively speaking, South Korea has almost no diplomatic options.' Analysts in China told ST that ties will likely thaw between Beijing and Seoul under Mr Lee, whom they expect will strike a better balance amid US-China competition. Associate Professor Zhang Guangxin at Zhejiang Gongshang University's East Asian Institute in Hangzhou noted that despite Yoon's pivot to the US that had chilled bilateral relations with China, trade between the two countries remains robust. Exports from South Korea to China grew 6.6 per cent in 2024 from a year ago, which underscores the robust trade relations, Prof Zhang noted. 'Mr Lee's clear victory over the People Power Party (which Yoon belonged to) shows the South Korean public's desire for economic stability,' he said. Prof Kim Chang Hyun of the China-Europe International Business School in Shanghai, meanwhile, said business elites in South Korea no longer see China as solely a big market for their products but 'an important partner to learn from', pointing to China's advances in green technology and artificial intelligence. The two experts said that public opinion in South Korea towards the US is likely deteriorating, given US President Donald Trump's demands that Seoul pay more for defence, and the threat of 'reciprocal tariffs' of 25 per cent. Students from South Korea – the third-largest source of foreign students to the US – are also facing heightened uncertainty over Mr Trump's immigration policies. 'There will be some rebalancing in public opinion in South Korea towards the US now,' Prof Kim said. Walter Sim is Japan correspondent at The Straits Times. Based in Tokyo, he writes about political, economic and socio-cultural issues. Aw Cheng Wei is The Straits Times' China correspondent, based in Chongqing. Join ST's Telegram channel and get the latest breaking news delivered to you.
