September 6, 2021 – A coup took place in the African state of Guinea over the weekend. Guinea is also considered China’s most important bauxite supplier. Aluminum prices on SHFE and LME are already reacting. Stainless steel futures have risen sharply today after the Chinese government ordered major steel and stainless steel producers in Guangdong to cut production by nearly 2 million tons. And thyssenkrupp’s sale of Acciai Speciali Terni could decide Germany’s federal election.
Coup in Guinea: aluminum prices jump
There was a coup in the African state of Guinea on Sunday. Guinea is considered the most important Chinese bauxite supplier, followed by Australia. In 2020 alone, Guinea exported more than 82 million tons of bauxite. In addition, Guniea is considered a major alumina producer.
Aluminum prices in London and China have responded as expected and have risen further due to supply concerns.
Source: bloomberg.com
Asian stainless steel futures rise more than 6%
On Monday morning, stainless steel futures jumped more than 6% on the SHFE. Spot prices on the Chinese market also reacted similarly, rising by as much as 4%.
Chinese stainless steel producers must reduce production
The background to this is the Chinese government’s request to several steel producers in Guangdong to cut production of stainless steel and steel. According to current calculations, the production cuts will affect more than 800,000 tons of long steel and 1,000,000 tons of flat steel.
According to market rumors, the Baowu Group will also be affected. Allegedly, the group will have to produce up to 19 million tons less steel from September to November in order to meet the Chinese government’s set targets.
Source: lme.com, shfe.com.cn
Accia Speciali Terni: The race for AST is not over yet
The race for Italian stainless steel producer Acciai Speciali Terni (AST) is not over yet. According to recent media reports, only three binding bidders are still in the running for the subsidiary of German steelmaker thyssenkrupp – two Italians and one Chinese. One bidder is said to have withdrawn its bid shortly before the end of the deadline, and it is believed to be the South Korean steel giant POSCO.
Baosteel still in the bidding process?
This means that Chinese steel giant Baosteel, which belongs to the state-owned Baowu Steel Group, would still be represented in the bidding process for AST.
Marcegaglia and Arvedi Group bid for Italy
In the highly political sale of AST – not only at Italian but also at European level – the two companies Marcegaglia and Arvedi Group are still represented and are said to have submitted binding offers to thyssenkrupp.
thyssenkrupp on the government subsidy drip for years
The ailing thyssenkrupp group has been on the German government subsidy drip for years and only in 2020 made a renewed attempt to get fresh money from the government. But this was rejected. In addition, thyssenkrupp is urgently dependent on the sale of AST and another failure could lead to the final collapse of the German conglomerate.
EU does not want sale to China
The EU has already signaled that it would consider a sale of Italian stainless steel producer AST to a Chinese company to be highly difficult.
Important election year in Germany
Elections are due to be held in Germany for the Bundestag and for a new Chancellor. Steel is one of the burning issues which traditionally win elections in Germany. Olaf Scholz, the SPD’s leading candidate, has already promised billions of euros in subsidies for thyssenkrupp if he becomes the new chancellor. And the CDU, above all still-Federal Economics Minister Peter Altmaier with the Steel Action Plan, but also CDU chancellor candidate Armin Laschet, have also promised the German steelmaker billions of euros in support for the green transformation.
Sale to Chinese state-owned group could decide German Bundestag election
If thyssenkrupp, as an almost state-owned group, were to sell a stainless steel company such as Acciai Speciali Terni, which is important for the overall European strategy, to a Chinese state-owned group in a German election year, this could be a disaster both for the SPD and even more so for the CDU, which has already fallen behind the SPD in the survey results.
The political reaction from the European Union is likely to be similarly fierce – especially on the part of European steel producers.
More than one election has already been decided on German steel, even if it is rolled in Italy.
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