Manufacturing Weekly Economic Highlights | 10 March 2025

Welcome to our weekly manufacturing and economic newsletter, providing key insights and analysis on the latest developments in the global market. Stay updated and make informed decisions!

In this edition, we focus on the economic conditions in America, Europe, China, and Thailand, as well as updates on the commodity, energy, and logistics markets.

North America

“The DXY plunged significantly lower this week . . .”

“ . . . amid concerns that US trade and tariff policies will hurt GDP growth”

“US gives 1-month reprieve on 25% tariffs to Canada and Mexico for goods covered by USMCA”

“Canada’s trade surplus with the USA hit a new record in January”

“US company hiring slowed in February, unemployment remains steady at 4.1%”

The USD Index (DXY) finished significantly lower this past week, from 107.56 on 28 February 2025 to close at 103.91 on 7 March 2025. The DXY is down 3.45% for the week, down 3.83% for the month, down 4.22% YTD, and up 1.16% over the past 12 months.

The USD posted its largest weekly decline since November 2022 over concerns that US trade and tariff policies will slow GDP growth, as reported on 7 March by The Detroit News.

Though traders “curbed their bets on dollar gains,” USD positioning remains long per data compiled by the Commodity Futures Trading Commission.

The Wall Street Journal reported on 6 March that the US gave Mexico and Canada a one-month reprieve on the 25% tariff on goods covered by the US Mexico Canada Agreement (USMCA). Goods not covered by the USMCA remain subject to the 25% tariff.

The White House indicated that about half of Mexican imports to the USA and 38% of Canadian imports are exempt from tariffs under the USMCA. These include automobiles and agricultural goods.

Subject to ongoing negotiations with Mexico and Canada, the full 25% tariffs are subject to being reinstated on 2 April 2025.

In related news. Canada’s trade surplus in January hit a 32-month high of $2.78 billion USD, more than double the revised December trade surplus. Canada’s trade surplus with the USA set a new record in January at CAD 14.4 billion, as reported on 6 March by Reuters.

Canada’s record US trade surplus was likely driven in part by US buyers stocking up on Canadian goods prior to the imposition of new tariffs.

Bloomberg reported on 5 March that US companies hiring weakened in February to the slowest pace since July 2024, led by reductions in the service sector and US regions hit by severe weather.

Private sector payrolls increased in February by 77,000 jobs, down from a revised 186,000 jobs in January.

ADP chief economist Nela Richardson said, “Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month. Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”

Goods producing employment rose by 42,000 jobs, the biggest gain since October 2022. The services sector jobs decline was led by trade, transportation, utilities, education, and healthcare.

US workers who changed jobs saw a 6.7% wage gain, whereas workers staying in their jobs saw wage gains of 4.7%.

The US Department of Labor Statistics released its Employment Situation Summary on 7 March 2025, indicating that total nonfarm payroll increased by 151,000 in February with the unemployment rate mostly unchanged at 4.1%. The total number of unemployed workers also remained mostly unchanged at 7.1 million, with long-term unemployed workers (jobless for 27 weeks or more) mostly unchanged at 1.5 million. The labor participation rate was also unchanged at 62.4%.

Meanwhile, Axios reported on 7 March that Americans more than 60 days delinquent on car payments rose to a record 6.6% for subprime auto borrowers, with prime borrower delinquencies rising to 0.39% in February from 0.35% in January.

Delinquencies typically increase in January and February following the holidays as consumers struggle to deal with holiday spending debt.

Europe

“The EUR surged significantly higher this week relative to the USD . . .”

“. . . as investors sought safe havens amid US trade and tariff policies”

“Eurozone 2025 inflation forecast raised to 2.3%”

“ECB cut policy rate 25 bp to 2.5%”

“We have risks all over, and uncertainty all over”

The EUR finished significantly higher this week, from $1.038 USD per EUR on 28 February 2025 to close at $1.084 USD per EUR on 7 March 2025. The EUR is up 4.41% for the week, up 4.90% for the month, up 4.64% YTD, and down 0.96% over the past 12 months.

The EUR surged more than 4% this past week to a four-month peak despite a rate cut by the European Central Bank (ECB) for the sixth time in nine months, as investors sought safe havens amid concerns over the US trade and tariff policies, as reported on 6 March by Reuters.

The EUR also benefit from reports that Germany will ramp up spending with a €500 billion ($540.9 billion USD) special fund for infrastructure, and increased defense spending.

The ECB also raised its 2025 Eurozone inflation forecast to 2.3%, up from 2.1% as forecast three months ago.

Meanwhile, the AFP reported on 6 March that the ECB cut its policy rate 25 basis points to 2.5%. ECB chief Christine Lagarde said, “we have huge uncertainty” and also said “we have risks all over, and uncertainty all over.”

She also noted that, “tariffs -- and particularly if there is retaliation -- are not good at all, and are net-negative on pretty much all accounts.”

Germany’s announced plans to massively boost defense and infrastructure spending are additional complicating factors impacting the ECB policy rate decisions.

The Wall Street Journal reported on 5 March that Friedrich Merz, the man in line to become Germany’s next chancellor, announced that Germany’s strict fiscal rules would no longer apply to military spending.

He said, “Given the threats to our freedom and to peace on our continent, we must do whatever it takes for our continent.”

If Germany approves the increased defense spending proposal, other European countries may choose to emulate Germany and boost their military spending as demanded by President Trump.

Bloomberg reported on 5 March that Merz said that Germany would seek to amend its constitution to exempt defense and security spending from limits on fiscal spending. This would allow Germany to spend potentially unlimited amounts of money to boost its military.

To change the constitution, a two-thirds majority vote in the lower house of parliament, the Bundestag, is required.

The Wall Street Journal reported on 4 March that the EU has proposed a new $158 billion USD fund to boost military spending and support Ukraine. European Commission President Ursula von der Leyen said, “we are living in an era of rearmament. And Europe is ready to massively boost its defense spending.”

The proposed fund would be raised by issuing EU debt and would be focused on purchasing air and missile defense systems, artillery systems, missiles, ammunition, drones, and anti-drone systems.

She also said, “of course, with this equipment, member states can massively step up their support to Ukraine.”

Reuters reported on 6 March that Germany’s proposed boost in military and infrastructure spending would boost its GDP growth from 0.0% to 0.2%, with the Eurozone growth increasing by 0.1% to 0.8%, as estimated by Goldman Sachs and Nomura.

China

“The CNY rebounded moderately higher this week”

“China raises 2025 deficit target to 4.0% of GDP to achieve GDP growth of 5.0%”

“Chinese imports plummet 8.4% YoY in Jan – Feb as it cuts growth of commodity strategic reserves”

“Chinese exports lose momentum, from 10.7% YoY growth in December to 2.3% YoY in Jan – Feb”

“Intimidation does not scare us. Bullying does not work on us. If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end”

The CNY finished moderately higher this week, from 7.284 per USD on 28 February 2025 to close at 7.234 per USD on 7 March 2025. The CNY is up 0.68% for the week, up 0.73% for the month, up 0.87% YTD, and down 0.67% over the past 12 months.

Chinese Premier Li Qiang announced China’s 2025 economic growth target of 5% and said that China met is 2024 growth goal of 5%, as reported on 4 March by The Wall Street Journal.

To support its growth target, China’s fiscal deficit target was raised to 4.0% of GDP from 3.0% of GDP in 2024.

The government’s consumer inflation target for 2025 is 2.0%, down from its 2024 goal of 3.0%, as China continues to struggle with deflationary pressures.

Consumer price inflation in 2024 was just 0.2% YoY.

China plans to create 12 million jobs in 2025, the same as 2024, with urban unemployment not to exceed 5.5%.

Local governments will be authorized to issue special purpose bonds with a total value equivalent to $605.6 billion USD. These bonds are typically used for infrastructure and development project funding.

China will need to overcome rising trade tensions and tariff policies, weak domestic demand, and the ongoing property sector crisis.

Meanwhile, Reuters reported on 7 March that China’s total imports shrank unexpected by 8.4% YoY over the period January through February 2025, compared with a gain of 1.0% YoY in December.

Exports “lost momentum” as it struggles with growing trade and tariff policy pressures, growing by only 2.3% YoY, down from a 10.7% YoY increase in December.

China’s customs agency publishes combined January and February data to smooth distortions caused by the annual Lunar New Year.

Analysts see the declining imports as a signal that China has started scaling back key commodity purchases.

Economist Intelligence Unit senior economist Xu Tianchen said, “the drop in imports is seen across grains, iron ore and crude oil, and could be related to China's own consideration of building strategic reserves. China may have imported too many of them in 2024, and needs to scale back the purchase volume. This is certainly true for iron ore, as steel production clearly exceeds what is needed by the economy."

Pinpoint Asset Management chief economist Zhang Zhiwei said, “(Slowing exports) may be partly due to the slowdown of export front loading, which was strong late last year to avoid the trade war. The sharp decline of imports may reflect both weak domestic demand as well as a decline in imports for processing trade. The damage of higher U.S. tariffs on China's goods will likely show up next month."

Imports by state-owned enterprises plunged 20.6% YoY, with private firms imports growing by 2.7% YoY.

ING chief economist for Greater China Lynn Song said, “it's likely that imports will remain soft this year unless we see a stronger than anticipated rebound of consumption and private investment this year. It's likely that after driving growth in 2024, the external environment will be less supportive this year, which puts more pressure on policymakers to improve domestic demand to achieve this year's 5% growth target."

Bloomberg reported on 4 March that China will struggle to reach its goal of 2% consumer inflation in 2025. Consumer inflation in 2023 and 2024 was 0.2% YoY.

Based on China’s growth forecast and deficit estimates, it actually anticipates little to no overall inflation. In 2024 China’s GDP deflator was a negative 0.8%, so no overall inflation would be an improvement.

The Times reported on 5 March that China’s foreign ministry accused US President Trump of using Chinese exports of fentanyl as a “flimsy excuse” for tariffs.

A statement from the Chinese foreign ministry said, “Intimidation does not scare us. Bullying does not work on us. If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.”

China also “doubled down” on its subsidy model to boost its AI and high-tech industries, despite US and European protests against Chinese subsidies. Chinese Premier Li Qiang said, “we will establish a mechanism to increase funding for industries of the future and foster industries such as biomanufacturing, quantum technology, embodied AI, and 6G technology.”

Around Asia: S. Korea

“The KRW bounced moderately stronger this week”

“S. Korean consumer inflation falls to 2.0% from 2.2% in January”

“Bank of Korea cuts policy rates by 25 bp to 2.75% to boost growth”

“S. Korean 2025 GDP growth forecast cut to 1.5%”

“January exports fall 10% YoY partly due to early Lunar New Year holiday”

The KRW finished moderately stronger this week, from 1,461.8 per USD on 28 February 2025 to close at 1,447.2 per USD on 7 March 2025. The KRW is up 1.00% for the week, up 0.53% over the past month, up 2.10% YTD, and down 9.89% over the past 12 months.

South Korea’s consumer inflation moderated in February, up 2.0% YoY in February from 2.2% YoY in January, as food prices remain stable and energy prices moderate, as reported on 5 March by Bloomberg.

Moderating inflation gives policy room for the S. Korean government to focus on boosting economic growth in 2H25 amid economic headwinds including US trade and tariff policies.

KB Kookmin Bank economist Moon Junghui said, “Trump’s tariffs will have bearings on the economy from semiconductors to automobiles. The focus for policymakers is now shifting to the economy from inflation, with the next interest rate cut happening as early as May.”

Bloomberg Economics said, “the slowdown in South Korea’s inflation in February back to the Bank of Korea’s 2% target indicates supply-driven price pressures are easing, while demand-side pressures remain soft. This supports its decision to resume an easing cycle in February and focus on supporting a recovery in growth.”

The KRW was Asia’s worst-performing currency in 2024, and it continues to face pressure arising from President Trump’s trade and tariff policies. Consumer prices could rise on more expensive imports if the KRW continues to devalue.

Meanwhile. The Wall Street Journal reported on 24 February that the Bank of Korea cut its policy rate by 25 bp to 2.75% after holding rates in January and prior cuts in October and November 2024.

The central bank also cut its 2025 GDP growth forecast to 1.5% from its November forecast of 1.9%. In 2024 S. Korea’s GDP grew 2.0% with average inflation of 2.3%.

Exports in January fell by 10% YoY amid an early Lunar New Year that cut four days from January’s work schedule.

Analysts expect further rate cuts in 2025, though the Bank of Korea will be cautious as lower borrowing costs could spur household debt growth and boost property prices, leading to increased financial instability.

Commodities

“GSCI Commodity Index sank lower again this week”

“The GSCI Industrial Metals rebounded moderately higher this week”

“China confirms plans to reduce steel industry capacity, but no details are provided”

“Chinese copper output to set record in 2025 but excess copper smelter capacity has driven processing costs below breakeven”

“Platinum market in 2025 to see third consecutive year of supply deficits”

“Antimony prices surge 400% YoY amid demand to replenish munitions stockpiles and China’s export restrictions”

The GSCI Commodity Index finished moderately lower again this week, from 553.58 on 28 February 2025 to close at 551.31 on 7 March 2025. This index is a weighted index based on world-production of each commodity in the index, with energy and industrial metals comprising the bulk of the index weighting. The GSCI is up 0.30% YTD. Trading Economics has lowered its GSCI forecast this week at 545 by the end of 1Q25 and 525 in 12 months.

The GSCI Industrial Metals index finished moderately higher this week, from 454.29 on 28 February 2025 to close at 470.02 on 7 March 2025. The Industrial Metals Index is up 13.34% over the past 12 months.

As predicted last week, China’s National Development and Reform Commission announced at the National People’s Congress in Beijing on 5 March that China will promote steel industry restructuring to reduce production, as reported on 5 March by Bloomberg.

Specific policy details were not announced, but the market has previously speculated that up to 50 million tons of steel industry capacity could be cut to reduce China’s massive steel overcapacity and restore steel mill profitability.

China steel exports hit a nine-year high of 110 million tons in 2024, with many countries including the USA seeking to protect their markets from dumped surplus steel products.

Shougang Group Co., one of China’s biggest state-owned steelmakers, proposed that Chinese nationwide steel out should be reduced by 150 million tons by 2030.

In related news, iron ore futures continued to fall with benchmark April iron ore on the Singapore Exchange down to $99.7 USD per ton, as reported on 4 March by Reuters.

Iron ore prices are under pressure by President Trump’s additional 10% tariff on Chinese exports including steel, and China’s expected policy to reduce steel industry capacity.

Bloomberg reported on 3 March that Chinese copper output is expected to hit another new record in 2025 despite a collapse in smelter processing fees due to excess capacity.

The Chinese government is considering limits on new copper smelter facilities, but already commissioned plants would not be affected. Copper production is expected to increase throughout 2025 and 2026.

Chinese refined copper output is forecast to increase 4.9% YoY to 12.45 MT in 2025, up from 3.1% YoY growth in 2024.

Smelting fees for spot cargoes of copper concentrate have turned negative, with smelters paying more than $20 USD per MT for processing. In August 2023 processing fees were $90 USD per MT. Term processing charges remain positive, but are below smelter’s breakeven levels.

Smelters are seeking to mitigate their losses by replacing copper concentrate with copper scrap, and also by reducing the copper content of their output products.

The Wall Street Journal reported on 5 March that the platinum market is forecast to have a 2025 supply deficit of 848,000 ounces, up from prior forecasts of 539,000 ounces, for the third year of deficits amid persistently low recycling rates and constrained mining supply.

The World Platinum Investment Council director of research Edward Sterck said, “The key takeaway is that the deficit we’re expecting in 2025 is of a such a magnitude that, even if geopolitical and economic uncertainties were to prove massively damaging to demand, they wouldn’t be able to eliminate it.”

Platinum mine supply is forecast to be down 5% YoY in 2025 with refined production forecast at 5.51 million ounces. This reflects reduced output in South Africa and a palladium-related decline in North America.

Platinum demand in 2025 is expected to fall by 5% to 7.85 million ounces, with automotive demand falling 1% YoY to 3.10 million ounces. Jewelry demand is expected to increase 2% YoY, with industrial demand forecast to fall 14% YoY.

Bloomberg reported on 7 March that antimony prices have surged nearly 400% YoY amid a global shortage which could worsen as the US and Europe replenish stockpiles of bullets and bombs depleted during the war in Ukraine.

Antimony prices have surged following China’s export restrictions on critical minerals.

Antimony is used in bullet cores, explosives, and shrapnel weapons. Antimony and lead from expiring munitions would typically be recycled into new weapons, but stockpiles including expiring munitions have been consumed by the Ukraine war.

China, Russia, and Tajikistan produce 87% of the world’s mined antimony supply.

Energy

“Crude oozed moderately lower again this week”

“Henry Hub inflated moderately higher this week”

“EU Natural Gas sank significantly lower again this week”

“US seeks to spend $20 billion USD to replenish the Strategic Oil Reserve”

“EU seeks to add flexibility to rule requiring natural gas inventories to be replenished to 90% by 1 November”

Brent Crude finished moderately lower again this week, from $73.16 USD per barrel on 28 February 2025 to close at $70.45 USD per barrel on 7 March 2025.

Henry Hub finished moderately higher this week, from $3.82 USD per MMBTU on 28 February 2025 to close at $4.40 USD per MMBTU on 7 March 2025.

EU Natural Gas finished significantly lower again this week, from €44.325 per MWh on 28 February 2025 to close at €38.768 per MWh on 7 March 2025, equivalent to $10.49 USD per MMBTU. EU Natural Gas is down 23.16% YTD. Trading Economics reduced its EU Natural Gas TTF forecast this week to €39.18 per MWH by the end of 1Q25 and €40.45 per MWh in 12 months.

The US Energy Secretary Chris Wright is seeking up to $20 billion USD to replenish the Strategic Petroleum Reserve, in accordance with President Trump’s policy announcement during his Inaugural Address in January, as reported on 7 March by Bloomberg.

The US Strategic Petroleum Reserve was created using a network of salt caverns following the Arab oil embargo in the early 1970’s. Its maximum capacity is approximately 700 million barrels.

Former President Biden significantly depleted the oil reserves by 290 million barrels to lower gasoline prices following Russia’s invasion of Ukraine. The current inventory is 395 million barrels.

Biden’s rapid inventory drawdown caused some damage to the reserve facilities, which will need to be repaired to restore the reserve to full capacity.

Meanwhile, the EU has been rapidly depleting its natural gas reserves, which have fallen far below the five-year average to 37.6%, as reported on 5 March by The Wall Street Journal.

EU rules have proposed extending its natural gas inventory replenish rules by two years through 2027 but are also recommending a “flexible approach” amid concerns that the replenishment target is contributing to higher gas prices.

The replenishment rule requires natural gas inventories to be replenished to at least 90% of capacity by 1 November each year. However, the commission has recommended providing countries with more flexibility to meet the target.

The European Commission said, “this two-year extension will contribute to ensuring continued security of energy supply across the EU and stability of the European gas market. At the same time, the overall framework to meet this 1 November target must be flexible enough during the filling season to allow a swift reaction to constantly changing market conditions.”

Logistics

“The BDI floated moderately higher again this week”

“The CFI sank moderately lower again this week”

“US plans to use revenue from fees on Chinese-built ships entering US ports to rebuild US shipbuilding industry”

“EU to announce decision on DSV acquisition of Schenker by 8 April”

Baltic Dry?Index finished moderately higher again this week, from 1,229 on 28 February 2025 to close at 1,400 on 7 March 2025. The BDI is up 40.42% YTD. Trading Economics has increased its BDI forecast this week to 1,346 by the end of 1Q25 and 1,194 in 12 months.

The Containerized Freight?Index finished moderately lower again this week, from 1,515.3 on 28 February 2025 to close at 1,436.3 on 7 March 2025. This index tracks the current freight prices for containerized transport from the most important Chinese ports. The CFI is down 41.62% YTD. Trading Economics has reduced its CFI forecast this week to 1,386 by the end of 1Q25 and 1,247 in 12 months.

The US administration is preparing policy measures to rebuild the US shipbuilding industry to counter Chinese industry dominance, as reported on 4 March by Bloomberg.

The administration plans to use revenue generated through fees on Chinese-built ships and cranes entering the US to execute eighteen action plans.

China has the largest shipbuilding sector in the world, producing more than half of all merchant vessels.

Meanwhile, EU regulators will announce their decision on DSV’s acquisition of Schenker by 8 April, as reported on 6 March by Reuters.

The acquisition is valued at $15.43 billion USD.

The EU competition enforcer can approve the deal with or without remedies or if it has serious concerns, it can open a four-month long investigation.

For more information on any of the topics and data discussed in this newsletter, including details of the source articles cited in this newsletter, contact Tractus via its LinkedIn page or visit the Tractus website at www.tractus-asia.com.

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