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Stainless Espresso: EU HRC, plate, slab shortages without quick solutions
Stainless Espresso: EU HRC, plate, slab shortages without quick solutions

14 April 2022 – The EU is short of HRC, plates and slabs. This drives partly flowery wishes. Nickel prices continue to rise, in some cases by more than 5%.

EU: HRC, plate and steel slab shortages drive flowery wishes

Hot-rolled coils (HRC) and plates in the European Union are in short supply. Availability has already collapsed with the outbreak of the war in Ukraine. Since the sanctions against steel exports from Russia, many processors, but especially traders, have been looking for alternative sources of supply – not only for HRC and plates, but also for steel slabs.

At the same time, raw material and energy costs have risen for European steel mills. Production has had to be cut back in some cases. EU mills are struggling to survive.

“If you look at the statements of some networks / associations, you realise the desperation. With statements that could not be further from reality, they are trying to push down purchase prices,” a seller told us today.

Chinese steel market sold off

Analysts in China currently expect further stimulus programmes from the Chinese government. And they await demand to increase significantly in the second half of the year. At the same time, commodity prices are expected to remain at a high level. The Chinese market for plates and slabs was already considered to be sold out in March 2022.

Steel sanctions only temporary?

If one then looks at the duration and the increase in sanctions against Russia since the annexation of the island of Crimea in 2014, it is not to be expected that Russian steel will be available on the market again any time soon. The number of active sanctions against Russia has tripled since the outbreak of the conflict in 2014 and the country is subject to almost 7,000 sanctions.

Nickel prices rise again

As we expected, not only Chinese spot nickel prices but also Asian futures have risen today, in some cases by more than 5%. The nickel incident on the LME also seems to have spoiled JP Morgan’s annual figures.

JP Morgan with credit default risk of approx. 1.5 billion US dollars

Due to possible credit defaults, the financial services provider had to set aside provisions of about 1.5 billion US dollars, which hit the annual result. Another indication that nickel prices will remain high and rising. JP Morgan was involved in the nickel incident to the tune of at least one billion US dollars. This had caused JP Morgan’s shares to plunge by more than 3% yesterday.

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