China ‘won’t sit idly by’ if US harms trade

Unemployed Jesse Bowman sweeps the street for money in the town of Clairton, home to a United States Steel Corporation. In a controversial move that has angered EU leaders, President Donald Trump has announced a plan to place tariffs on steel and aluminum imports, stirring trade tensions with China. (AFP)
Updated 04 March 2018
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China ‘won’t sit idly by’ if US harms trade

BEIJING: China warned Sunday that it was ready to hit back if the US damaged its economic interests, fueling fears of a trade war after President Donald Trump unveiled tariffs on steel and aluminum.
Trump’s announcement on Thursday sparked a flurry of counter-threats from other nations. But Washington’s main trade rival had avoided any overt warnings of potential retaliation until now.
“China doesn’t want a trade war with the United States,” Zhang Yesui, spokesman for the National People’s Congress, told a news conference on Sunday, the eve of the rubber-stamp parliament’s annual session.
“But if the US takes actions that hurt Chinese interests, China will not sit idly by,” Zhang said. An official English-language interpreter added the phrase, “and will take necessary measures.”
Zhang warned that “policies informed by misjudgment or wrong perceptions will hurt relations and bring consequences no side wants to see.”
Trump’s announcement came as President Xi Jinping’s top economic aide, Liu He, met US officials at the White House to discuss the fraught economic relationship.
During his visit, according to the official Xinhua news agency, Liu and his hosts “agreed that the two countries should settle their trade disputes by cooperation rather than confrontation.”
Since announcing plans to impose a 25 percent tariff on steel imports and 10 percent on aluminum, Trump has shrugged off threats from other nations, boasting on Friday that “trade wars are good, and easy to win.”
China has been the main target of Trump’s anger over the US trade deficit since his presidential campaign, but its steel and aluminum exports to the United States are minimal.
While China is the world’s largest steel producer, it accounts for less than one percent of US imports and sells only 10 percent of its wrought aluminum abroad.
Steel producers in Canada, Brazil, Mexico, South Korea and Turkey rely far more heavily on the US market.
“The American action to put sanctions on other countries’ reasonable steel and aluminum exports in the name of harming national security is groundless,” Chinese Foreign Minister Wang Yi said on Saturday.
Some US allies, like Canada and Australia, had hoped to be spared the tariffs. A major South Korean business lobby, the Federation of Korean Industries, said Sunday it sent letters to US Congress members and officials seeking an exemption.
A US official said Friday possible exemptions to the measures would be considered on a case-by-case basis.
Australia warned that a trade conflict could put the brakes on global economic growth.
“That’s what concerns me, if we continue to see an escalation of rhetoric and, ultimately, action around tariffs applying for imports and exports across multiple economies... this will lead to a slowdown in growth,” trade minister Steve Ciobo told Sky News Australia Sunday.
Trump ratcheted up the rhetoric on Saturday, threatening a tax on cars from the EU if it takes retaliatory measures.
On Friday European Commission chief Jean-Claude Juncker said the EU was drawing up measures against leading US brands such as Levi’s and Harley-Davidson.


Saudi energy minister recommends driving down oil inventories, says supply plentiful

Updated 19 May 2019
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Saudi energy minister recommends driving down oil inventories, says supply plentiful

  • Oil supplies were sufficient and stockpiles were still rising despite massive output drops from Iran and Venezuela
  • Producer nations discussed how to stabilise a volatile oil market amid rising US-Iran tensions in the Gulf, which threaten to disrupt global supply

JEDDAH: Saudi Arabia’s Energy Minister Khalid Al-Falih said on Sunday he recommended “gently” driving oil inventories down at a time of plentiful global supplies and that OPEC would not make hasty decisions about output ahead of a June meeting.
“Overall, the market is in a delicate situation,” Falih told reporters before a ministerial panel meeting of top OPEC and non-OPEC oil producers, including Saudi Arabia and Russia.
While there is concern about supply disruptions, inventories are rising and the market should see a “comfortable supply situation in the weeks and months to come,” he said.
The Organization of the Petroleum Exporting Countries, of which Saudi Arabia is de facto leader, would have more data at its next meeting in late June to help it reach the best decision on output, Falih said.
“It is critical that we don’t make hasty decisions – given the conflicting data, the complexity involved, and the evolving situation,” he said, describing the outlook as “quite foggy” due in part to a trade dispute between the United States and China.
“But I want to assure you that our group has always done the right thing in the interests of both consumers and producers; and we will continue to do so,” he added.
OPEC, Russia and other non-OPEC producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.
Russian Energy Minister Alexander Novak told reporters that different options were available for the output deal, including a rise in production in the second half of the year.
The energy minister of the United Arab Emirates, Suhail Al-Mazrouei, said oil producers were capable of filling any gap in the oil market and that relaxing supply cuts was not “the right decision.”
Mazrouei said the UAE did not want to see a rise in inventories that could lead to a price collapse and that OPEC would act wisely to maintain sustainable market balance.
“As UAE we see that the job is not done yet, there is still a period of time to look at the supply and demand and we don’t see any need to alter the agreement in the meantime,” he said.
US crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, data from the government’s Energy Information Administration showed on Wednesday.
DELICATE BALANCE
Saudi Arabia sees no need to boost production quickly now, with oil at around $70 a barrel, as it fears a price crash and a build-up in inventories, OPEC sources said, adding that Russia wants to increase supply after June.
The United States, not a member of OPEC+ but a close ally of Riyadh, wants the group to boost output to bring oil prices down.
Falih has to find a delicate balance between keeping the oil market well supplied and prices high enough for Riyadh’s budget needs, while pleasing Moscow to ensure Russia remains in the OPEC+ pact, and being responsive to the concerns of the United States and the rest of OPEC+, the sources said earlier.
Sunday’s meeting of the ministerial panel, known as the JMMC, comes amid concerns of a tight market. Iran’s oil exports are likely to drop further in May and shipments from Venezuela could fall again in coming weeks due to US sanctions.
Oil contamination also forced Russia to halt flows along the Druzhba pipeline — a key conduit for crude into Eastern Europe and Germany — in April. The suspension, as yet of unclear duration, left refiners scrambling to find supplies.
Russia’s Novak told reporters that oil supplies to Poland via the pipeline would start on Monday.
OPEC’s agreed share of the cuts is 800,000 bpd, but its actual reduction is far larger due to the production losses in Iran and Venezuela. Both are under US sanctions and exempt from the voluntary reductions under the OPEC-led deal.
REGIONAL TENSIONS
Oil prices edged lower on Friday due to demand fears amid a standoff in Sino-US trade talks, but both benchmarks ended the week higher on rising concerns over disruptions in Middle East shipments due to US-Iran political tensions.
Tensions between Saudi Arabia and Iran are running high after last week’s attacks on two Saudi oil tankers off the UAE coast and another on Saudi oil facilities inside the Kingdom.
Riyadh accused Tehran of ordering the drone strikes on oil pumping stations, for which Yemen’s Iran-aligned Houthi militia claimed responsibility. 
Saudi Arabia’s minister of state for foreign affairs said on Sunday that the Kingdom wants to avert war in the region but stands ready to respond with “all strength” following the attacks.
“Although it has not affected our supplies, such acts of terrorism are deplorable,” Falih said. “They threaten uninterrupted supplies of energy to the world and put a global economy that is already facing headwinds at further risk.”
The attacks come as the United States and Iran spar over Washington’s tightening of sanctions aimed at cutting Iranian oil exports to zero, and an increased US military presence in the Gulf over perceived Iranian threats to US interests.