What's good for the goose isn't always good for the gander. That's probably the best way to describe what's happening to the share price of BlueScope Steel Limited (ASX: BSL) even as investors cheered the easing in global trade tensions.
The US market rallied late in its trading session yesterday when news emerged that US president Donald Trump and European Commission President Jean-Claude Juncker struck an agreement on a way forward to de-escalate the trade war between the US and EU.
The share price of BlueScope Steel Limited (ASX: BSL) plunged 3.6% to $18.01 in morning trade on the news, making it the third worst performer on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index after Speedcast International Ltd (ASX: SDA) and WiseTech Global Ltd (ASX: WTC).
Unlike Speedcast and WiseTech, BlueScope was sold off as investors started pricing in some success from the removal of tariffs on EU steel and aluminium imported into the US.
Trump had imposed extra taxes on these commodities exported from a host of countries including China, Canada and Japan. This caused steel and aluminium prices in the US to spike higher, to the benefit of BlueScope as the company isn't impacted from the tariffs and can benefit from the higher prices.
While these tariffs remain, investors worry that a compromise between the US and EU to remove these restrictions on steel pave the way for Trump to negotiate similar outcomes with other steel producing countries.
Not by coincidence, aluminium-exposed miner Alumina Limited (ASX: AWC) is also on the backfoot today although its 0.4% drop to $2.82 at the time of writing is modest by comparison. Still, Alumina is lagging the mining sector with the likes of South32 Ltd (ASX: S32) and Newcrest Mining Limited (ASX: NCM) leading the sector higher.
But let's not get ahead of ourselves. The US still has ways to go before it will agree to removing tariffs on the two metals from the EU, let alone the other countries.
Trump wants to remove all tariffs between the two economies and that's a pretty ambitious goal, which even if possible, would require a very long period to implement.
Some US companies are already complaining about the high metal prices impacting on their manufacturing operations during the latest quarterly reporting season. US industries better get used to the higher metal prices as this is unlikely to change anytime soon.
This in turn means the upward trend in BlueScope's share price probably hasn't ended quite yet.
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