Sunday 18th Mar, 2018

Rio, BlueScope likely winners from Trump tariffs

Donald Trump. Photo: Creative Commons / Gage Skidmore
Donald Trump. Photo: Creative Commons / Gage Skidmore

Rio Tinto and BlueScope Steel appear to be winners in US President Donald Trump’s new tariffs on steel and aluminium imports, from which Australia will be exempt.

The tariffs – 25% on steel, and 10% on aluminium – have had a major impact on the iron ore market, where prices have dropped from around US$75 a tonne last week, to closer to US$70 a tonne this week.

But BlueScope, which exports Australian steel to the United States, and has US$3 billion in assets of its own in the US, is set to benefit substantially.

BlueScope boss Mark Vassella praised the efforts of Prime Minister Malcolm Turnbull, and trade minister Steve Ciobo, in securing the exemptions.

“There’s a clear recognition about Australia’s status as an ally and our four-to-one trade surplus in America’s favour,” Vassella was quoted by The Australian.

Rio Tinto is also viewed as a winner, given its Australian aluminium operations, and the fact it sends 1.4 million tonnes of aluminium each year to the US from its operations in Canada, another nation which has secured exemptions from Trump’s tariffs.

These positives haven’t been well received on the sharemarket, however, where Rio Tinto has seen its share price drop from $81.40 on February 28 to $74.00 on March 13, with a $3.26 dividend on March 1.

BlueScope has fared relatively well in the same timeframe, dropping from $16.24 on February 28 to $15.64 on March 13, with a 6.4 cent dividend on March 2.

Meanwhile BHP, which mines and exports raw steel inputs, has seen its share price drop from $31 at the end of February, to a close of $28.67 on March 13: a drop of $2.33 per share, albeit in part due to a $1.01 dividend issued on March 8.

Fortescue, which chiefly deals with iron ore, saw its price drop from $5.20 to $4.63 over the same timeframe, down 57 cents per share, well in excess of a 15.7 cent dividend issued on March 1.