Base Metals on the Rise, Energy Top Topic in 2022
Base Metals on the Rise, Energy Top Topic in 2022

January 10, 2022 – Welcome to the New Year dear readers. We are back full of energy and look forward to an exciting and successful 2022 with you.

The year also got off to an interesting start for base metals. As already indicated in the middle of 2021, the topic of energy will play a significant role in economic and political events in 2022. Indonesia, China’s most important thermal coal supplier, has suspended coal exports. And in Europe, energy is also driving the economy, which has already impacted base metals, especially aluminium prices, pushing them back towards the $3,000 per tonne mark. China has made economic stability a priority for 2022. And hydrogen could now be included in the EU Carbon Border Tax CBAM.

Base metals: Aluminium, nickel and stainless steel on the rise

Whereas before Christmas there had been a big swan song for important base metals such as nickel and aluminium, the market wanted it differently. Nickel is holding firm above the $20,000 mark per tonne and is trending strongly towards $21,000. Aluminium has risen sharply again since mid-December due to the energy shortage in Europe and is only just below $3,000 per tonne on the LME.

Aluminium and nickel are also on an upward trend on the Asian SHFE. Nickel is up about 2.5% today and aluminium is up over 1%. Stainless steel futures have even risen by more than 3.3%.

China supports economy

The Chinese government had already announced at the end of 2021 that it would take economic policy measures for stable growth in 2022 as its top priority. The economic data from December have already shown new momentum compared to the previous month and the purchasing managers’ indices were above the expansion threshold of 50 points.

The first measures have already been taken. Chinese banks have been asked to increase real estate lending and the takeover of real estate developers has been simplified. For 2022, Deutsche Bank currently expects Chinese profits to grow by about 15%.

Indonesia bans coal exports

The Indonesian government has suspended coal exports for January 2022 to secure the national energy supply. This caused Chinese thermal coal futures to rise significantly last week. The main buyer of Indonesian coal is China, which sourced about 60% of its coal imports from Indonesia in 2021.

Energy top topic in 2022

The energy issue is likely to keep prices at a high but stable level in 2022. This is also the view of the German employers’ association Gesamtmetall. Energy costs, supply chains and scarce availability, e.g. of steel and aluminium, will continue to be the defining issue for the German metal and electrical industry over the next 12 months, according to association president Stefan Wolf.

EU Carbon Border Tax: Hydrogen to be included in CBAM

Dutch MEP Mohammed Chahim, who introduced the proposal for CBAM to the European Parliament, is currently calling for certain organic chemical products, polymers and also hydrogen to be included in the CBAM draft, in addition to steel, aluminium, cement and fertilisers.

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