When looking at the trade data that were released by Indonesia’s Statistics Agency (BPS) on Monday (16/04) there is something interesting about Indonesia’s steel exports. Indonesia is a relatively small steel producing nation (and actually imports about half of its domestic steel consumption, mostly from China) but its iron & steel exports to the USA soared over 1,500 percent month-on-month (m/m) from USD $2.13 million in February 2018 to USD $35 million in March 2018. Reason behind this surge may very well be the trade war between China and the USA.

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Despite the selloff on Wall Street overnight where the Dow Jones Industrial Average plunged 1.9 percent, the S&P 500 tumbled 2.23 percent, while the Nasdaq Composite dropped 2.74 percent, losses in Asia were less severe on Tuesday morning (03/04) as these losses were kept below 1 percent, overall. The selloff on Wall Street, partially driven by a sell-off of tech industry giants, was the weakest start of the second quarter for US shares since the Great Depression.

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Many Asian stocks are in deep red territory dragged down by a 3.49 percent decline of Japan's Nikkei 225 index in the morning of Friday (23/03). The Nikkei 225 is responding to plunging stocks on Wall Street overnight where the Dow Jones Industrial Average tumbled 2.9 percent, while both the S&P 500 index and Nasdaq Composite dropped 2.5 percent, each. All three benchmark US indexes suffered their biggest drops since 8 February 2018.

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Indonesia's benchmark thermal coal price (Harga Batubara Acuan, or HBA) touched a multi-year high in March 2018. The HBA, which is determined by Indonesia's Energy and Mineral Resources Ministry on a monthly basis (and which is based on several global and domestic indexes), rose 1.2 percent month-on-month (m/m) to USD $101.86 per metric ton in March 2018, its highest position since May 2012.

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The weakening growth trend of the Chinese economy may not have ended yet. Despite the nation's gross domestic product (GDP) growth rebounding to 6.9 percent year-on-year (y/y) in 2017, its economy is expected to cool in 2018 as a government-led crackdown on debt risks and factory pollution drags on overall activity in the world's second-largest economy. This is a problem for Indonesia as well because China is Indonesia's biggest trading partner.

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Coal demand remains high, particularly due to robust demand from China, the world's largest coal importer. This brings the projection for the full-year 2018 coal price to the range of USD $98.50 - $107.00 per metric ton. So far this year the coal price (ICE NewCastle Coal January 2018) surged around 4 percent, while in full-year 2017 the price had surged 57.09 percent.

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Coal imports into China are expected to recover in the last two months of the year and therefore various analysts say the coal price is able to touch beyond USD $97 per ton before the year-end. In October coal imports into China - the world's largest coal importer - had fallen by a whopping 24 percent (m/m) to 21.3 million tons due to the availability of plenty domestic coal supplies.

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The value of Indonesia's coal exports to China during January-August 2017 reached USD $1.68 billion, up 63 percent compared to the export value of the commodity in the same period (to China) one year earlier (USD $1.03 billion) according to the Trade Attaché of the Indonesian Embassy in Beijing.

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The economy of China grew 6.8 percent year-on-year (y/y) in the third quarter of 2017. An improving Chinese economy is important for the Indonesian economy as China is the biggest trading partner of Indonesia. Slightly over 10 percent of total Indonesian exports are shipped to China, the world's second-largest economy.

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Several Chinese companies that are ranked in the Fortune 500 are exploring investment in Indonesia, including North Kalimantan, as part of their follow-up initiative after the Belt and Road Forum for International Cooperation (BRF) that was held on 14–15 May 2017 in Beijing. This event, visited by Indonesian President Joko Widodo, is a platform for working out action plans for investment in the areas of infrastructure, energy and resources, production capacity, trade, financial cooperation, and the identification of major projects.

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Concerns over a trade war are rising as the European Union (EU) plans to impose a 25 percent retaliatory import tariff on various US products, ranging from clothes to motorcycles, if US President Donald Trump indeed goes ahead with his plan to impose a 25 percent import tariff on steel imports and a 10 percent tariff on aluminum imports.

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Several negative sentiments are putting pressure on the crude palm oil (CPO) price in the first week of March 2018. These sentiments are expected to continue pushing downward pressure on the CPO price in the remainder of this week. On Monday (05/03) the CPO price on the Malaysia Derivatives Exchange (May 2018 shipments) fell 0.28 percent to 2,467 ringgit per metric ton. Compared to one week earlier, the price has now declined 2.91 percent.

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The Consulate General of Indonesia in Guangzhou (China) said Indonesia's coffee exports to China reached USD $34.1 million in the January-September 2017 period, hence Indonesia now ranks second in terms of biggest coffee exporters to China. Vietnam ranks first, by a distance, with a coffee export value of USD $368.8 million in the same period.

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Despite the suicide bombs attack in Jakarta on Wednesday evening (24/05) that killed 3 police officers (and the two militants) at a Jakarta bus station, the Jakarta Composite Index rose after opening on Friday (26/05), while the rupiah only weakened slightly against the US dollar (Thursday was a public holiday). It is yet another example of the fact that markets around the globe have become used to the existence of militant attacks. Particularly a relatively small attack will not lead to any negative sentiments.

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Now the United States - under the Donald Trump administration - are focused on their "America First" policy, China is able to increase its influence in the Asian region. This was apparent at the 30th Association of Southeast Asian Nations (ASEAN) summit on April 26-29 at the Philippine International Convention Center in Pasay City where regional leaders expressed their support for the denuclearization of North Korea but were reluctant to discuss the tensions around the South China Sea.

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As promised US President Donald Trump pulled the United States out of the Trans-Pacific Partnership (TPP), an ambitious free trade deal that was signed in October 2015 (after five years of negotiating) and had created the world's largest free trade area (covering 12 countries and 40 percent of global trade). Trump's move to withdraw the USA from the TPP implies that he distances the USA from its Asian allies and gives China the opportunity to fill in the empty space that is left by America.

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Over the past couple of weeks public outcry ensued in Indonesia due to rumors (a hoax) that said there are currently about ten million workers from China in Indonesia, implying these immigrants are (potentially) "stealing" jobs from the local population. Xenophobia and nationalist sentiments are no strangers to Indonesia, a country that faced a long colonial period, and therefore this hoax easily ignited anxiety among (part of) the Indonesian people. But how many foreigners are currently actually working in Indonesia?

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Indonesia's November 2016 coal price broke a record. The nation's benchmark thermal coal price (locally known as the Harga Batubara Acuan, HBA) - a monthly price set by Indonesia's Energy and Mineral Resources Ministry and which is based on domestic and international coal indices - jumped 22.9 percent month-on-month (m/m) to USD $84.89 per metric ton this month, the highest monthly HBA price rise ever recorded. Compared to the start of the year, Indonesia's coal price has now risen 59.6 percent, the sixth straight monthly gain. But is this reason for euphoria?

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Many things happened this week. A devastating terror attack in Nice (France) killed at least 84 people, while - at the time of writing - a coup attempt occurred in Turkey (that seems to have failed). However, these events have little impact on the performance of global stocks and currencies (with the obvious exception of the Turkish lira). Wall Street touched record highs, while Indonesian stocks rose to a 13-month high and the Indonesian rupiah strengthened to a four-month high. Lets take a closer look at the performance of these markets over the past week.

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Steel pipe and tube manufacturer Steel Pipe Industry of Indonesia (Spindo), which has the largest steel pipe production capacity among manufacturers in Indonesia, is expected to show solid corporate earnings in the period ahead as the company bought raw materials for its production process when the hot-rolled coil (HRC) price was near its lowest at USD $265 per ton. Investa Saran Mandiri expects that Spindo's earnings will improve markedly starting from the second quarter of 2016 as the HRC price has risen to USD $485 per ton in May 2016.

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