24 May 2022 – Already on Monday after India’s announcement of a 15% export tax on steel and stainless steel, global HRC prices rose by up to 4% in some cases. Market participants expect that EU steel producers will now also adjust their prices upwards. Tesla’s Shanghai factory on its way back to full production. Europeans desperate for magnesium.
India: Will EU steel producers now raise prices?
Over the weekend, the Indian government announced the immediate introduction of an export tax on steel and stainless steel products of 15%. Market participants are now reporting that EU steel producers are already thinking about adjusting their prices upwards as a result of this news. Overall, the market expects steel and stainless steel prices to rise again as Indian producers are forced to adjust their prices.
HRC prices already up by up to 4%
As of Monday, 23 May 2022, Chinese, European and North American HRC prices had already risen by up to 4% on a weekly basis, according to recent market data.
Shanghai: Tesla’s factory on way back to full production
Tesla is approaching full production of around 2,600 electric cars per day again at its Gigafactory in Shanghai.
Tesla was forced to reduce its shifts from three to one due to the Covid-19 closures and had hoped to return to pre-closure levels on 16 May. Now it is expected that work will be fully resumed by next Tuesday (31 May).
EU: In desperate search for magnesium
Magnesium, important in aluminium production among other things, is in short supply. This was clearly demonstrated in 2021, when magnesium prices shot through the roof after China had to cut back production significantly due to energy shortages.
EC Staff Working Document on Rare Earths and Magnesium
A so-called Staff Working Document of the European Commission, which is currently being circulated by the media and has allegedly been “leaked” to them, is not so up-to-date anymore. It already dates from February 2022.
Only 15% of total EU demand can be covered from 2030 onwards
It says that it would mean extensive investments of 1 to 2 billion euros to restart smelting activities for magnesium in Europe from 2025. And before 2030, it would only be possible to cover just 15% of total European demand.
EU magnesium industry extinct since 2001
After Europe’s own aluminium and steel producers had driven the EU magnesium industry to ruin with dumped imports from China, a cautious step was taken towards breaking away from Chinese magnesium. After all, European steel and aluminium producers source more than 90% of their requirements from China.
EC: Market protection measures are essential
At the same time, the European Commission is considering direct market protection measures to prepare the popular “level-playing field” in order to be able to produce magnesium economically in the EU at all. Otherwise, EU producers would simply continue to buy their magnesium in China.
Magnesium produces 28,000 kg/CO2 per tonne
All in all, however, magnesium is a general problem for the European Green Deal, CBAM and production right on our own doorstep. Because the production of magnesium is incredibly dirty. Because 1,000 kg of Chinese magnesium pollute the environmental balance with 28,000 kg of CO2. This means that aluminium alloys currently produced in Europe with a magnesium content of 5% are polluted with an additional tonne of CO2. Of course, this does not appear in any European CO2 balance, does it?
EU magnesium industry only possible under certain conditions
Even if the Europeans manage to build up a magnesium industry within their own borders, it will not be able to meet demand, will have to be directly protected by market protection measures and, even with the most modern production methods, will be a heavy burden on the European CO2 balance, on top of which high costs for energy and ETS certificates would have to be added. Moreover, such a dirty produced product would have to be integrated into the EU Carbon Border Tax CBAM – like Direct Reduced Iron and dirty hydrogen.
Can this work when the EU is so dependent on raw material imports?
- Actual Indian stainless steel exports already hit with 15% tax
- India imposes up to 50% export taxes on iron ore, stainless steel, steel
- Nickel price jumps more than 8% on dip-buying
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.