[SMM Steel Market Morning News] The Ministry of Commerce Responds Again to High-Level Sino-US Economic and Trade Talks: The US Side Should Be Well-Prepared and Take Actions on Issues Such as Canceling Unilateral Tariff Hikes

★Macro★

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【Xi Jinping Holds Talks with Russian President Vladimir Putin】

Xi Jinping pointed out that China and Russia should adhere to the general direction of cooperation, exclude external interference, and make the foundation of cooperation "stable" more solid and the "momentum" for "progress" more sufficient. The two countries should leverage their complementary advantages in resource endowments and industrial systems to expand high-quality, mutually beneficial cooperation in areas such as economy and trade, energy, agriculture, aerospace, and artificial intelligence. They should use the alignment of the Belt and Road Initiative and the Eurasian Economic Union as a platform to build a high-standard interconnection pattern. They should fully unleash the potential of the "China-Russia Year of Culture" to strengthen cooperation in education, film, tourism, sports, and local exchanges, promoting deep-level people-to-people connectivity. They should closely coordinate and cooperate in multilateral platforms such as the United Nations, the Shanghai Cooperation Organization, and BRICS, unite the Global South, uphold true multilateralism, and lead the global governance reform in the right direction.

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【Bank of England Cuts Interest Rates by 25 Basis Points】

The Bank of England cut interest rates by 25 basis points, reducing the benchmark interest rate from 4.5% to 4.25%. This is the fourth rate cut in the current easing cycle, in line with market expectations.

03

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【Ministry of Commerce Responds Again to High-Level Sino-US Economic and Trade Talks: The US Should Be Prepared and Take Action on Issues Such as Canceling Unilateral Tariff Hikes】

The Ministry of Commerce held a regular press conference on the afternoon of May 8. A reporter asked about the high-level Sino-US economic and trade talks. He Yadong, the spokesperson for the Ministry of Commerce, stated that China's firm opposition to the US's indiscriminate use of tariffs has been consistent. If the US wants to resolve issues through negotiations, it must face up to the serious negative impacts that unilateral tariff measures have brought upon itself and the world, acknowledge international economic and trade rules, fairness, justice, and the rational voices of all sectors, and demonstrate sincerity in negotiations. It should be prepared and take action on issues such as correcting erroneous practices and canceling unilateral tariff hikes, work in the same direction as China, and resolve mutual concerns through equal consultations. If the US says one thing and does another, or even attempts to use talks as a pretext to continue coercion and blackmail, China will never agree, nor will it sacrifice its principled stance or international fairness and justice to seek any agreement.

★Industries and Downstream Sectors★

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【SMM Construction Steel Inventory Survey】

 This week, the inventory of construction steel shifted from a decline to an increase. The total inventory of rebar was 6.1434 million mt, up 1.65% WoW. The total inventory of wire rod was 1.2248 million mt, up 3.73% WoW. Among them, the in-plant inventory of rebar was 1.9073 million mt, an increase of 151,000 mt or 8.60% WoW (previous: -9.78%), and a decrease of 228,000 mt or 10.68% YoY (previous: -21.08%).

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[Guangzhou: Reduces Interest Rates on Individual Housing Provident Fund Loans]

The Guangzhou Housing Provident Fund Management Center announced that, in accordance with the Notice on Reducing Interest Rates on Individual Housing Provident Fund Loans issued by the People's Bank of China (PBOC) on May 7, 2025, the interest rates on individual housing provident fund loans will be reduced by 0.25 percentage points starting from May 8, 2025. The interest rates for first-home individual housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years will be adjusted to 2.1% and 2.6%, respectively. The interest rates for second-home individual housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years will be adjusted to no less than 2.525% and 3.075%, respectively. New interest rates will apply to individual housing provident fund loans disbursed starting from May 8, 2025. For individual housing provident fund loans disbursed before May 8, 2025, the new interest rates will apply starting from January 1, 2026, in accordance with the loan contract agreements.

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[Shenzhen Reduces Housing Provident Fund Interest Rates Starting Today]

According to the Shenzhen Housing Provident Fund Center, starting from May 8, Shenzhen has begun to synchronously reduce the interest rates on individual housing provident fund loans by 0.25 percentage points, in line with the PBOC's decision. According to calculations by the Leyoujia Research Center, under the new interest rates, if a first-home buyer with two children takes out a pure housing provident fund loan of 2.09 million yuan with equal principal and interest repayments, they could save a total of 99,400 yuan in interest after the new policy takes effect. On May 7, the PBOC issued a notice on reducing interest rates on individual housing provident fund loans, deciding to reduce the interest rates on individual housing provident fund loans by 0.25 percentage points starting from May 8, 2025. The interest rates for first-home individual housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years will be adjusted to 2.1% and 2.6%, respectively. The interest rates for second-home individual housing provident fund loans with terms of 5 years or less (including 5 years) and over 5 years will be adjusted to no less than 2.525% and 3.075%, respectively.

★Other Hot Topics★

⭕[EU: Plans to Impose Tariffs on US Goods Worth 95 Billion Euros if Negotiations Fail]The European Commission has launched a public consultation on possible countermeasures in response to US tariffs. The European Commission stated that if negotiations fail, it plans to impose tariff measures on US goods worth 95 billion euros. The tariff proposals include aircraft, automobiles, and bourbon whiskey, as well as meat, fish, and agricultural products. The EU is considering imposing export restrictions on the US for scrap metal and chemicals worth 4.4 billion euros. The EU will initiate dispute settlement procedures against the US at the World Trade Organization regarding automobiles and reciprocal tariffs. The European Commission stated that it will continue to prioritize seeking mutually beneficial and balanced solutions with the US.

⭕【Bank of England: Monetary Policy Will Need to Remain Restrictive for a Sufficiently Long Period】The Bank of England reiterated that "monetary policy will need to remain restrictive for a sufficiently long period until the risks of inflation sustainably returning to the 2% target in the medium term have further dissipated." The Bank of England stated that the increase in trade tariffs implies a weaker global growth outlook, but the drag on UK economic growth and inflation is likely to be relatively small.

⭕【India-US Tariff Negotiations: India Proposes "Zero-for-Zero"】Sources familiar with the matter revealed that during trade negotiations with the US, India proposed a "zero-for-zero" tariff arrangement for specific goods, including steel, auto parts, and pharmaceuticals. However, the proposal is based on the principle of reciprocity and is limited to a certain quantity of imported goods. Washington, however, has expressed concerns about India's quality control orders, viewing them as non-tariff trade barriers to its exports. The US's so-called "reciprocal tariff" of 26% on India has been shelved, but the baseline tariff of 10% remains in effect. Reports indicate that imports of industrial products exceeding a certain quantity threshold will be subject to tariffs at regular rates.