OIL PRODUCTS: EU 16 Nations Oil Inventories Fall 2.29mb in Feb

Note: Resend of an earlier post from our Asia-Pac team

US President Trump said that 25% tariffs on all imports of steel and aluminium imports would be announced today. Again Canada is in the firing line as its steel and aluminium make up the largest shares by far of US imports of these products. However, while the US is the world’s second largest steel importer, according to Tradeimex, it is not a major US import but domestically fabricated metals are the 7th largest sector by value added 

• Steel imports accounted for only 1.1% of total 2023 imports and aluminium was only 0.9%. Thus these tariffs are unlikely to be a major inflationary issue for the US but will still significantly impact certain sectors who use them as inputs to production, such as autos.
• According to Tradeimex, electronics (14.6% of the total), nuclear reactors & machinery (14.5%), vehicles (12.0%), fuel & oil (8.4%) and pharmaceuticals (5.6%) were the largest categories imported into the US in 2023. Steel and aluminium didn’t feature in the top 10 but it is not surprising that Trump has been vocal on autos.
• The main impact is likely to be felt by the key exporters with Canada and Mexico in the top three for both steel and aluminium. In 2023, Canada accounted for 25% of US steel imports and 39% of aluminium, while Mexico was 11% and 7% respectively.
• 10% of aluminium imports came from China and last week the US already announced a 10% universal tariff on all Chinese imports, according to TrendEconomy. It doesn’t feature in the top source of steel imports but they may be coming through a third country, such as Mexico.
• Other APAC countries impacted include Korea, Japan and Taiwan for steel and India, Korea and Australia for aluminium. For Australia, overall aluminium exports accounted for only 4% of total exports and so US tariffs will have a minimal impact. 

US steel imports by source % total 2023

US aluminium & articles imports by source % total 2023

Of note:

EURUSD 2.78bn at 1.0290/1.0325.

USDJPY 1.14bn at 153.00.

USDCAD 1.16bn at 1.4425 (a little far).

EURUSD 1.15bn at 1.0300 (tue).

EURUSD 1.19bn at 1.0300 (wed).

AUDUSD 1.04bn at 0.6200 (wed).

USDJPY 2.25bn at 152.00 (fri).

AUDUSD 1.07bn at 0.6200 (fri).

USDCNY 2.16bn at 7.3000 (fri).

• EURUSD: 1.0250 (2.01bn), 1.0260 (738mln), 1.0275 (615mln), 1.0290 (364mln), 1.0300 (864mln), 1.0315 (557mln), 1.0320 (471mln), 1.0325 (520mln), 1.0350 (380mln), 1.0375 (526mln), 1.0400 (1.31bn).
• USDJPY: 151.75 (551mln), 152.75 (335mln), 153.00 (1.14bn).
• USDCAD: 1.4370 (318mln), 1.4400 (696mln), 1.4425 (1.16bn).

Hargreaves Lansdown highlight increased gilt trading activity amongst their clients in January.

• When compared to January 2024, they note that “the number of trades and amount of assets invested this January were 75% higher. Both figures were much higher than December 2024 too, with the number of trades seeing a 93% increase.”
• The January figures are the highest levels they have witnessed since ’21, with the early January spike higher in yields and maturity of the 0.25% 31 January 2025 gilt cited as the key drivers of activity.
• A reminder that the 0.25% 31 January 2025 gilt was particularly attractive to retail investors, given its low coupon status and UK tax laws.
• Hargreaves Lansdown suggest that “with investors aware that the gilt was going to mature very soon, it’s likely many sold ahead of maturity and reinvested in other gilts, given the spike in yields.”
• Looking forwards, they expect February to be “another popular month for gilt purchases, largely linked to the maturity of the gilt on 31 January - many clients will have received their maturity payment last week and given continued elevated yields, reinvesting into other gilts may be attractive.”
• Note that we do not have Hargreaves Lansdown’s gilt trading volume to hand, but thought the above may be of interest given wider discussions surrounding the maturity of the 0.25% 31 January 2025 gilt and retail investor activity.