US-China Trade War: Commodities Front and Center



Liquefied Natural Gas (LNG) and Tungsten Lead the Charge

The ongoing trade war between the US and China has brought liquefied natural gas (LNG) and tungsten, a metal used in defense and energy industries, to the forefront.

LNG: China Retaliates

China, the largest LNG importer, has imposed a 15% import levy on LNG from the US, the largest exporter. This could lead to a major shift in global LNG flows, with China seeking alternative suppliers like Qatar and Australia.

Tungsten: China's Strategic Move

China, which produces 80% of the world's tungsten, has imposed export controls on the metal and other niche materials like molybdenum and tellurium. This shows China's focus on areas where it has leverage, as tungsten is used in armor-piercing missiles, semiconductor wafers, and solar panels.

Other Commodities Affected

China has also targeted American oil, coal, and agricultural machinery, but stopped short of imposing levies on crops. This leaves room for China to use agricultural purchases as a bargaining chip in the future.

China's Cautious Approach

Despite the trade war, China has taken a more cautious approach this time around compared to the Trump administration's first term. China's domestic markets have shown resilience, with record box office receipts during the Lunar New Year holiday.

Outlook

The commodities market will continue to be impacted by the US-China trade war. LNG and tungsten are at the heart of the conflict, and it remains to be seen how alternative suppliers and export controls will affect global markets. China's strategic focus on niche metals could also have long-term implications for industries like defense and electronics.