China cuts key interest rate, nickel price jumps upward
China cuts key interest rate, nickel price jumps upward

14 June 2023 – China surprisingly cut standing lending facility interest rates, which was very positively received by the markets. Nickel prices reacted promptly. The EU goes on a buying spree for critical commodities in Mercosur countries – but does it bring fair play? And different sources are reporting that there is a new OLAF circumvention investigation against stainless steel ongoing.

China lowers important interest rate, markets react positively

To the surprise of many market participants, China’s central bank recently implemented a notable adjustment to its standing lending facility (SLF) interest rates. The People’s Bank of China announced on Tuesday that the overnight rate has been reduced by 10 basis points to 2.75 percent. Similarly, the seven-day and one-month rates have also been lowered by 10 basis points each to 2.9 percent and 3.25 percent, respectively. These revised rates officially went into effect on June 13 according to the People’s Bank of China.

Nickel prices jump upward

The reaction on the markets followed promptly and caused nickel prices in Europe and Asia in particular to jump upward. In Europe they increased by more than 6%, in Asia/China by more than 5%. But also the other base metals were able to make gains. The first upward movements in Asian stainless steel prices could already be seen today on the spot markets.

Mercosur: EU on a buying spree?

Since 2019, the European Union and the Mercosur countries have been trying to conclude a free trade agreement. Especially in view of the massively increasing demand for battery raw materials, such an agreement is becoming increasingly urgent for the EU.

Argentina and EU conclude MoU on critical raw materials

The predicted increase in demand is enormous. EU Commission President Ursula von der Leyen is taking action and traveling to Argentina herself to sign a Memorandum of Understanding (MoU) to secure Europe’s access to Argentine raw materials.

“Lithium is very important because it is crucial for clean energy technologies,” EU Commission President Ursula von der Leyen told a news conference in Buenos Aires, citing an estimated 12-fold rise in lithium demand in Europe by 2030.

Lithium and nickel in hot demand

And it’s not just lithium where demand is expected to rise dramatically. Forecasts predict that global demand is estimated to increase by factors of 18-20 for lithium, 17-19 for cobalt, 28-31 for nickel, and 15-20 for most other materials by 2050, requiring a drastic expansion of lithium, cobalt, and nickel supply chains and likely additional resource discovery.

A level playing field for all involved?

The Argentine government’s desire to be involved in this commodity boom is understandable, but so is the demand for a fair agreement at eye level between the parties. This is where Argentina and the other Mercosur countries will have to pay attention. The EU has repeatedly shown that it has its own ideas about a level playing field for all – as long as the EU can dictate the rules of the game, all is well.

Stainless steel: New OLAF circumvention investigation ongoing

According to different sources, the European Anti-Fraud Office (OLAF) is currently investigating the possible circumvention of anti-dumping duties on cold-rolled stainless steel flat products. Under investigation are imports from Taiwan that may have originated in China and been routed through Taiwan to avoid higher duties.

Specific details are not yet known and are being kept confidential by authorities. But at least one EU member state is said to have already taken countermeasures to prevent further incidents of this kind.

European Public Prosecutor’s Office filed complaint in Germany

In another case, the European Public Prosecutor’s Office, in cooperation with the EU’s anti-fraud agency OLAF, filed a complaint with the Cologne Higher Regional Court against a German steel trader, according to recent media reports. The case involves the misclassification of goods in order to evade anti-dumping duties.

Urgent reminder: Stick to the import rules

We have continued to remind our readers through our channel of the importance of knowing the right suppliers. A company will come under great scrutiny if it is negligent or unaware of the true origin of its materials. Once again, an example of how important it is to work cleanly and legally and to have the right suppliers and traders.

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