10 February 2025 – Nickel prices on the SHFE, LME and on the spot market have only known one direction for weeks: upwards. At the start of the week, SHFE contracts once again rose sharply. At the same time, nickel ore prices have risen by almost 20 % since the beginning of February. Meanwhile, the German steel trade is proving resilient: Sales remained stable in 2024, while inventories fell to a three-year low at the end of the year.
German steel trade with stable sales in 2024
Despite ongoing crisis reports from EU steel mills, several media outlets reported stable sales in the German steel trade for 2024. The Bundesverband Deutscher Stahlhandel had previously pointed out in January 2025 that inventories had fallen to their lowest level in three years in December.
Justified question: How much truth is there in EUROFER’s fairy tales?
These figures raise questions: Does the picture of an alleged decline in EU steel mills painted by the European steel producers’ association EUROFER really match reality? For years, lobbyists have been warning of a collapse of domestic steelworks – but the latest market data once again tell a completely different story. Another fairy tale from the EU steel manufacturers’ lobby?
EU steel mills rely on CO2 certificates instead of production
One reason for the discrepancy could be the business model of many European steel mills. Instead of ramping up production, some companies appear to be deliberately keeping capacities low in order to benefit from the lucrative EU ETS certificates. In 2023, reduced steel production and the sale of surplus emission allowances is likely to have earned EU steel mills an additional €3 billion – a model reminiscent of Tesla’s strategy, which generates a significant part of its profit from the sale of such allowances.
Nickel prices continue to rally
Nickel prices on the SHFE have been rising inexorably for more than three weeks. In a weekly comparison, they rose by 4.4 % in mid-February, and with the renewed rise on Monday, the increase now totals 6.6 %. Spot market prices for nickel in China have also risen by more than 6% in this period.
Nickel ore increases in price by almost 20%
A key driver of this development is the rising cost of Indonesian nickel ore, which has become almost 20% more expensive since the beginning of February. Possible capacity bottlenecks, new export restrictions and growing demand are driving up prices. This development is not only affecting nickel futures, but also the prices of nickel pig iron and stainless steel. LME nickel contracts are also showing upward potential again and exceeded the USD 16,000 per tonne mark again last week.
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