Concerns over a trade war between major economies shook up global markets last week after President Donald Trump announced that the U.S. will impose tariffs on steel and aluminum imports.
Additional duties will amount to 25% on steel and 10% on aluminum imports.
The move sent stocks lower and prompted harsh responses from political leaders and industry bodies, some of which were threatening retaliation.
The IMF was among those organizations warning that the restrictions could cause damage both outside the U.S. and to the U.S. economy itself, including to its manufacturing and construction sectors, which are major users of aluminum and steel.
"We are concerned that the measures proposed by the U.S. will, de facto, expand the circumstances where countries use the national-security rationale to justify broad-based import restrictions," IMF spokesman Gerry Rice said. "We encourage the U.S and its trading partners to work constructively together to reduce trade barriers and to resolve trade disagreements without resort to such emergency measures."
The developments weighed on sentiment for metals, which largely finished the week in the red.
Base metals had a particularly bad run, all plummeting between 2% and 4%.
Zinc hit US$3,415/t, down 3.9% on the previous week's closing, while aluminum and lead both declined 3.0%, to US$2,143/t and US$2,458/t, respectively. Copper and nickel dived 2.5% and 2.3%, respectively, finishing the week at US$6,887/t and US$13,412/t.
Precious metals saw marginal declines only, with gold down 0.5% to US$1,322/oz and silver retracting 0.1% to US$16.50/oz.
Bulk metals held up fairly well, though iron ore remained widely flat US$75.60/t.
Even though assessments are ongoing as more news about the Section 232 tariffs becomes available, preliminary analysis by RBC Capital Markets indicates the overall impact on the sector might even be positive, though the team said volatility is initially likely to ruffle sectors.
"We expect multiple developments this week and beyond which are likely to contribute to current share price volatility," the team said in a March 5 note. "The potential for a global demand slowdown should trade wars escalate is an obvious risk in our view, but we also note the much improved financial position the sector largely finds itself in, which should insulate the sector far better than in recent downturns."
RBC assessed limited effects for iron ore prices as Chinese supply-side reforms continue to be the dominating force for price performance. Gold prices could see a boost amid lower U.S. economic competitiveness and a weakening dollar on the back of higher inflation. The bank also identified modest support for coking coal amid increasing U.S. domestic consumption and a further tightening of the seaborne market.
"Although we would expect a sharp increase in US capacity utilisation, the steel price has already moved upwards to an extent and growth implications could dampen prices from here," the team said. "Aluminium tightness in US physical premiums is likely to be offset by lower [London Metal Exchange] prices and more pressure on costs in the value chain."
On the investment front, the mining sector at large could see a rise if the U.S. dollar further weakens and structural inflation moves higher.
"Our analysis suggests price movements will be relatively modest from here, however we favour US aluminium premiums, gold, coking coal and commodity trading businesses as beneficiaries; global steel, US domestic steel, and iron ore pricing as more or less unchanged; and, we see aluminium prices and aluminium input costs more negatively," the analysts concluded. "Our analysis suggests Glencore Plc, Anglo American Plc, Teck Resources Ltd., BHP Billiton Group would be more favorably exposed to the tariffs while Rio Tinto would be the most negatively impacted."
Cobalt 27 Capital Corp. seeks to raise up to C$130 million through a private placing, issuing up to 11.4 million shares at C$11.40 apiece. The proceeds will be used to fund the acquisition of cobalt-related streams and royalties and for general corporate purposes.
Fortescue Metals Group Ltd. launched and priced an offering of US$500 million of 5.125% senior unsecured notes due 2023 in a bid to refinance and repay existing debt. The notes will have a five-year noncall term. The offering is expected to be settled by March 15.
Wolf Minerals Ltd. increased an existing £55 million fully secured bridge loan facility to £65 million, maturing in 2020, to meet its short-term working capital needs and to help it achieve commercial production at the Drakelands tungsten project in the U.K.
Gold Road Resources Ltd. secured A$150 million in funding through an agreement with a financing syndicate for a A$100 million revolving corporate facility, a A$50 million working capital facility and a gold hedging facility. The funds will support its funding contribution for the preproduction-stage Gruyere gold project in Western Australia.
Beadell Resources Ltd. agreed to a US$60 million senior credit facility from Sprott Private Resource Lending LP to fund the development of its Tucano gold mine in Brazil, for the retirement of an existing loan facility and for general corporate purposes.