Europe chems stocks claw back losses as markets firm despite tariffs

LONDON (ICIS)–European chemicals stocks firmed in early trading on Wednesday as markets rebounded from the sell off of the last week, despite the onset of US tariffs on aluminium and steel and Europe’s pledge to retaliate.

European markets all rallied on Wednesday as companies clawed back some of the losses seen, brought on by growing concerns that global political tensions could spiral into multiple trade wars.

Escalating tensions between the US and Canada has driven down markets over the last couple of days, exacerbated by Canada moving to tariff electricity exports and the US doubling steel and aluminium tariffs on the country in response, to 50%.

US President Donald Trump reversed the 50% tariffs decision later on Tuesday, but the moved forward with the imposition of 25% global duties on steel and aluminium on Wednesday.

European Commission President Ursula von der Leyen said on Wednesday that the bloc would respond proportionately to the measures, but not necessarily at US aluminium and steel.

Estimating the value of the tariffs at $28bn, von der Leyen pledged to respond with countermeasures worth €26bn, without setting out what products are expected to be caught in the dragnet.

The measures will start on 1 April and expected to enter fully into effect on 13 April, she added.

“Over the next two weeks, we will consult with key stakeholders to help us shape this new package,” she said.

“The objective is to counterbalance the increased trade value affected by the US tariffs, while minimising the impact on European businesses and consumers. But the disruption caused by tariffs is avoidable if the US Administration accepts our extended hand and works with us to strike a deal,” she added.

The tariffs had been clearly signalled ahead of time, giving markets breathing space to price them in, and the EU is a relatively minor exporter of steel and aluminium to the US compared to neighbours Canada and Mexico.

Commodity prices also firmed in midday Europe time trading on Wednesday, on the back of the weakening US dollar.

The STOXX 600 chemicals index was trading up 1.44% compared to Tuesday’s close, recovering some of the ground lost over the last few days, with Arkema, AkzoNobel, Air Liquide and Fuchs Petrolub among the big gainers.

Wider European markets all rallied, with the STOXX Europe 50 index up 1.05%, Germany’s DAX up 1.78% and Italy’s FTSE MIB up 1.43%.

US markets tentatively joined the rally in early trading, with the Dow index trading up 0.11%while the S&P 500 firmed 0.85%. The value of the S&P 500 has decline over 8% in the last month.

Focus article by Tom Brown