Stainless Espresso: Black Monday? The media's urge to spread chaos
Stainless Espresso: Black Monday? The media’s urge to spread chaos

March 8, 2022 – Black Monday? Rather not. With effective headlines, the mass media have once again tried to influence the stock markets. A brief analysis of whether they made it and what opportunities are available to you right now. Nickel jumps briefly to over $ 100,000 per ton. Chinese stainless steel prices again increased by double digits.

Black Monday? The media’s urge to spread chaos

Yesterday, the mass media once again tried to stir up uncertainty and fears in the economy, just as they did over the Corona pandemic. With statements about a Black Monday and the effects of the Ukraine crisis and the sanctions against Russia at the stock exchanges can be increased simply the editions, if one Corona already no more headlines supplies. Fortunately, they did not succeed.

March 7, 2022 was not a Black Monday

The minus of 1.98% on the German DAX or the -2.37% on the US Dow Jones would certainly have been smaller without the unnecessary doom and gloom. In any case, this was not a Black Monday, if we compare it with October 26, 1987, which is considered to be the name giver of the Black Monday. In 1987, the Dow Jones had lost 7.69% at the close of trading. March 7, 2022 was not a Black Monday.

German business with Russia manageable

People like to portray Russia as an important trading partner for Germany. No question, Russia has some importance to Germany and its export-oriented economy. With its 141 million inhabitants and an export volume of the German economy in 2021 of approx. 26.6 billion euros, Russia ranks only 14th, just a few million euros above Sweden in 15th place, which with approx. 10.35 million inhabitants is not even 1/10 as large as Russia. The German economy also exported 26.6 billion euros to Sweden in 2021.

Foreign trade balance: Russia and China in last place

In addition, Russia ranks 232nd in terms of foreign trade balance, which is not far from China, which ranks 236th, the worst foreign trade balance of all Germany’s trading partners. In other words, Germany imports much more from Russia and China than it can export there. A negative foreign trade balance is not considered desirable in economic terms.

Can the economy compensate for the loss of Russia as an export country?

In view of the overflowing order books, the loss of Russia as an export country is certainly painful, but it can be compensated for, especially for the German and European economy. After all, they are facing billions of new orders in the security and energy transition that is now necessary.

Positive signals: security and energy turnaround

In the face of a new security and threat situation in Europe and the world, the German government alone has announced a 100 billion euro immediate program to rearm the German armed forces. In addition, at least 2% of the gross domestic product is now to flow into the defense budget each year. Until now, the German armed forces had a budget of around 50 billion euros per year. After the adjustment, this will be over 70 billion euros, much of which will flow back into the economy.

National security interests should simplify awarding

According to the new German SPD defense minister, national security interests will even be invoked if necessary. This would override the lengthy European award procedures for military projects, which can otherwise take ten or more years, and directly pump billions of euros into the economy.

Independence from Russian energy supplies

Europe, and Germany in particular, have been dependent on Russian energy supplies, such as gas and oil, for up to 55% of their energy needs. A point of contention for many years, alternatives are now being openly sought. Two new terminals for international deliveries of liquefied gas have already been approved in Germany.

Speeding up alternative forms of energy

And in other respects, too, the pace of green transformation is now being stepped up. After all, the energy has to come from somewhere. And after Russia threatened to possibly stop deliveries of gas via Nord Stream 1, an adjustment of laws and regulations will also have to come in the area of energy transition.

Shares in German solar and wind power manufacturers are already in demand, and rose by up to 18% on Monday.

Green transformation needs raw materials

The sometimes rapid increases in commodity prices and tighter availability are a foretaste of a new reality in the green transformation. This new reality has now been foreshadowed by the conflict in Ukraine and the Russia sanctions. Prices for raw materials will rise due to the huge demand for e.g. nickel, aluminum, copper, cobalt, lithium in the green transformation towards a net zero society. The current crisis shows where this will lead. So it is time to develop strategies for this and to adapt.

Huge investment programs need capacities

All the additional investment in security and energy has so far failed to take into account the fact that EU member states have launched a massive investment package worth hundreds of billions of euros to boost the economy in the wake of the Corona pandemic. In the face of overflowing order books, sanctions against Russia could free up much-needed capacity in the West.

Not a Black Monday, but an opportunity

In any case, there is no sign of a Black Monday here. Rather, it is a tremendous opportunity for the European and global economy to make progress in its transformation to a Net Zero society. Even today, corresponding headlines are already circulating with conjectures of possible measures that are supposed to have only one goal: To stir up uncertainty and make money for others. Look at the numbers and at the possibilities. A cool head is usually the better advisor.

Nickel jumps to over $100,000 per tonne

The LMEselect 3 Month Nickel briefly jumped above $100,000 per ton tonight and currently ranks at around $80,000 per ton. The LME Nickel c1 started today’s trading at around $81,000 per ton. This means that nickel prices have clearly left the all-time high from 2008 behind them and, even if only briefly, have easily jumped by 100%.

Chineses stainless steel prices 12% up again

Chinese stainless steel prices have also made significant gains again today. Stainless steel futures on the SHFE are up an average of 12%. Chinese spot prices for stainless steel again increased by up to 12%.

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