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All just speculation?
All just speculation?

23 September 2022 – The European stock and commodity exchanges are a little unsettled before the weekend. What is happening right now and is it all just speculation in the end? And Indonesia seems to be losing the nickel dispute with the European Union at the WTO. Why the government is calm about it and why it could turn into a Pyrrhic victory for the EU.

All just speculation? The stock markets before the weekend

At the start of trading before the weekend, the markets are not quite as friendly today as they have been in recent days. The Asian commodity exchanges SHFE and DCE have been much more relaxed than the European LME at the opening.

Reaction to developments in the Russia-Ukraine war?

All in all, it seems to be a reaction to the developments in the war between Russia and Ukraine, and that the stock markets are now minimising some risks over the weekend and securing or parking money after substantial gains, especially in nickel, the announcement by the US Federal Reserve that it wants to raise interest rates further and some very speculative statements by rating agencies and financial investors.

Furthermore, we consider it quite conceivable that profits are to be taken after a thoroughly positive week and currently see the real market trends quite differently. Especially with reference to large investment houses, such as BlackRock, which might be tempted to influence prices with specially produced news in order to be able to use the subsequent and predictable reaction of the markets for favourable purchases.

WTO dispute: Indonesia vs. European Union

The Indonesian government conceded this week that it is likely to lose the dispute with the European Union over the nickel export ban.

At the same time, however, Indonesia made clear that the government is calm about the outcome, as Indonesia has achieved its goal of building up its own nickel-processing industry and thus a much higher added value.

Nickel export tax planned

With the planned export tax on low-processed nickel products, the Indonesian government already has an effective instrument to keep raw materials in the country. With a tax, Indonesia can be sure that neither the WTO, the European Union nor EUROFER would have anything to say against it.

Problematic environmental standards in mining and processing

For the European Union and the local stainless steel and energy industry, however, the end of the dispute at the WTO could turn into a Pyrrhic victory – at least if the EU were really serious about green standards.

Indonesian nickel is increasingly criticised for being mined and processed with massive environmental damage. This could make it difficult to sell and use in Europe, but also in the United States.

Nickel price development remains positive

It is therefore to be expected that the nickel price will continue to develop positively despite the now very likely end of the export ban in view of dwindling raw material stocks, environmental standards and export taxes.

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