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Stainless Espresso: Commodity prices do not stick to outdated models
Stainless Espresso: Commodity prices do not stick to outdated models

2 February 2022 – Commodity prices and base metals show once again that old models and analyses can no longer be relied upon. Steel prices in Germany pick up. Base Metals continue to rise.

Commodity prices: When old models meet new realities

Commodity prices, especially for base metals such as nickel, aluminium and copper, have already struck fear into the hearts of many analysts over the past year. Contrary to many assumptions and analyses that are now considered “conservative”, commodity prices have risen significantly and simply exceeded all expectations.

Commodities do not follow surveys

Even if surveys, e.g. the Base Metal Poll by Reuters from January 2022, reflect the hope that average base metal prices should fall, current developments have simply given the lie to this survey.

They are just polls that can be influenced with the right questioning technique or the right participants in such a way that in the end the desired result for commodity prices emerges.

New realities cannot be represented with old models

Contrary to all the otherwise “normal” trends of recent years or even decades, new realities have emerged in the Corona Pandemic. These can already no longer be explained with conventional models.

Net-zero strategy: Commodity run has just begun

The mere fact that the major world economies, such as China, the United States or Europe and India, are simultaneously trying to initiate the green transformation towards a net-zero economy will keep demand and also economic growth above the level of recent years. This is also the view of companies like Goldman Sachs or major international banks like ING Group.

Base metal inventories at historic lows

Currently, forecasts from 2021 are also still being postulated, which see nickel production in surplus for 2022, for example. The inventories on the LME and SHFE indicate otherwise. There, inventories for base metals have reached historic lows. And when inventories of copper, for example, traditionally shoot up before the Chinese New Year, this year there is a yawning void. There is currently no sign of a supply surplus for commodities.

Times of cheap energy and infinite availability are over

The times of cheap energy and raw materials, infinite availability and political stability are over for the time being. The changing world needs new economic models to make better predictions. And if “experts” still try to look more than 6 months into the future and see their hour coming, the current facts speak a completely different language.

Germany: Rising steel prices expected

Increased raw material and energy costs, but also high demand, continue to drive up steel prices in Germany. Caution is also advised at present with regard to the European Commission’s decision not to impose provisional duties on imports of hot-dipped galvanised coil from Russia and Turkey in the current anti-dumping case due to the complexity of the ongoing proceedings. This has already led to some nasty surprises in the anti-subsidy case against imports of flat-rolled stainless steel from India and Indonesia.

Base Metals continue to rise

Important base metals are up again this morning. LME Nickel is up again by almost 3%. Copper is up more than 1.6%. Aluminium and zinc follow, each up just under 1%.

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