06 March 18 The Business Times by JANICE HENG
WITH steel and aluminium accounting for a sliver of Singapore's total trade, planned tariffs by the United States are likely to have a limited direct impact, said analysts.
If they cause metal flows to be redirected to South-east Asian markets, the resulting glut could even mean lower materials costs for builders and manufacturers here.
Instead, the real worry for Singapore is the spectre of a global trade war, added analysts.
US President Donald Trump has vowed to impose a 25 per cent import tariff on steel and a 10 per cent tariff on aluminium, with a formal announcement expected this week.
OCBC economist Selena Ling observed that Singapore "is not a big exporter" of steel and iron, nor of non-ferrous metals - which includes aluminium - "in general, much less to the US specifically".
Steel and iron together accounted for 0.5 per cent of Singapore's total exports and 0.7 per cent of total re-exports in 2017, she said.
Non-ferrous metals accounted for 0.7 per cent of total exports and 1.3 per cent of total re-exports that year.
The US tariffs are thus less likely to have a direct impact on Singapore as an exporter. But they could mean lower costs for industries here which rely on these imported metals.
ING chief economist and head of research for Asia-Pacific Rob Carnell said: "The main effects are likely to be indirect, and reflect displacement of Asia-produced steel and aluminium to other destinations, including Singapore."
Julien Hall, Asia metals content director at S&P Global Platts, expects steel products from South Korea and Japan to be redirected to South-east Asia, with "some impact on prices in Asia in the short term".
Similarly, Europe and South-east Asia are potential destinations for aluminium foil from China, said S&P Global Platts senior managing editor on metals Mok Yuen Cheng.
"The affected volume is estimated to amount to 10 to 15 per cent of China's total foil export, which will exert some downward pressure on foil prices outside the US," she added.
Singapore's construction industry - which accounts for the bulk of the country's steel consumption - is not celebrating just yet.
As a price-taker and a small market, Singapore has to wait and see how suppliers react to the US tariffs, said Singapore Contractors Association Limited president Kenneth Loo: "We don't really know what to expect."
While the fall in costs might well occur, the industry faces "more pressing issues than that", he added, citing concerns over construction demand.
Beyond the tariffs themselves, however, the possibility of sparking a global trade war is of larger concern.
The "degree of global retaliation" is one factor that will determine the effect on Singapore, said Mr Carnell.
As a small open economy heavily dependent on trade and investment, the spectre haunting Singapore is that of "tit-for-tat trade measures that could escalate into a bilateral, if not global, trade war in the worst-case scenario and if cooler heads do not prevail," Ms Ling said.
"But this is not yet the baseline scenario for now."