22 July 2022 – Automotive manufacturers in Europe and Asia are demanding significantly more steel products. For example, Japan is reporting increases in steel demand of more than 24% compared to the same period last year. Nickel deficit of 37.000 tons in 2022 possible. ECB rate hike: A thought experiment.
Automotive demand for steel picks up
Increasing demand for steel products from the automotive sector is reported from Europe and Asia – especially cold-rolled products are in demand. Clear signs that the industry is recovering. In Europe, supply prices are expected to increase in the near future.
Japanese car industry with significantly increased demand
Demand from Japan is also expected to increase by almost 24% in the third quarter of 2022 compared to the same period last year. And this increase is also expected to continue in the fourth quarter, rising by at least 8% compared to the previous quarter.
Nickel still in short supply – sustainability becomes more important
Kwasi Ampofo, Head of Metals and Mining at BloombergNEF, in a recent talk with mining.com, predicted a possible technical shortfall in nickel of around 37,000 tonnes for 2022 – should Russia, as one of the most important high-grade nickel suppliers, not be subject to sanctions after all.
No sanctions, but tariffs
So far, there have been no sanctions against nickel exports from Russia due to the Ukraine crisis. However, the United States recently imposed tariffs on nickel products of Russian origin.
Too big for sanctions?
And even if the two Russian groups Norilsk Nickel and Rusal could try to forge a company with a possible merger that could be “too big for sanctions”, the Western states would still have the possibility to impose import bans on individual products or product categories.
Sustainable raw material production limited
With regard to the sustainable and CO2-reduced production of raw materials, however, bottlenecks could quickly arise, as so far very few mining companies have green and environmentally compatible production. And there is already a billion-dollar backlog of investment in the mining business.
ECB raises key interest rates – A thought experiment
The ECB has announced an increase in key interest rates for the euro area. The background here, as in the United States, is to fight inflation.
Unbridled money pumped into the market
After the US Federal Reserve and the European Central Bank have pumped money into the markets almost without restraint for over a decade, new situations – such as the inflation of already scarce raw materials – are to be fought with time-honoured methods.
Example: Germany lacks 2 million flats
If we simply take the important housing construction market as a basis, an increase in key interest rates makes the construction of buildings more expensive. This makes it less attractive for investors, but also for private individuals. And this in Europe that is already affected by a shortage of housing. In Germany alone, there will be a shortage of at least 2 million flats in the 77 major cities in 2021.
Building should now become even more expensive?
In February 2022, German construction prices had already risen by more than 14%. On top of interest rates for real estate, which have already risen by up to 3%, the ECB’s key interest rate hike is now to be added. Which will make building even more expensive.
This depresses the demand for urgently needed housing. And not only there. This is just one example among many.
Shortage will not be combated by interest rate hikes
But for the time being, this does not change the amount of money on the market. Wouldn’t it therefore have made sense to first significantly reduce the amount of money available instead of using the old tool of interest rate hikes to try to push down inflation in a market that is affected by a shortage that will not go away?
- USA imposes high tariffs on Russian steel and aluminium
- World battle for stainless steel scrap begins
- Nickel continues to rise, SHFE inventories at record lows
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.