9 February 2023 – Indian stainless steel producers did not just realise their love for Russia yesterday, and even in times of Western sanctions they are happy to circumvent them. And at the same time they are striving for a free trade agreement with the European Union. Can this work from a moral point of view alone? The German government is working hard on new steel subsidies for its ailing steel producers. And seems to be overtightening the subsidy screw in the process. Will Federal Economics Minister Robert Habeck now get his own “toll” moment? Nickel and molybdenum stable at partly extremely high levels.
- India's new Russia love, Jindal Stainless positions itself clearly
- Is Jindal Group circumventing Western sanctions?
India’s new Russia love, Jindal Stainless positions itself clearly
That Russia and India are more closely connected than the EU and the United States would like has been known not only since the outbreak of the war in Ukraine. It is also known that India has not joined the Western sanctions. This is clearly visible, among other things, in the sharp increase in coal exports from Russia, which will probably have risen by more than 50% by 2022. This is likely to have at least compensated to some extent for the Russian war chest that was lost due to the loss of Western energy imports.
Indian stainless steel producers most important Russian suppliers
But Indian stainless steel producers also have few moral qualms about taking a clear position and boosting their sales to Russia. Indian manufacturer Jindal Stainless was by far one of the largest exporters of stainless steel to Russia in 2022. Despite Western sanctions. And, according to recent media reports, it plans to significantly increase its exports to Russia in 2023.
Is a free trade agreement with the EU conceivable under these conditions?
At the same time, the Indian government is trying to conclude a free trade agreement with the European Union and is also seeking to relax the EU Safeguard measure on certain steel products with regard to quotas. Whether the close ties between the Indian state and the local steel and stainless steel producers to Russia will meet with European approval is more than questionable.
Is Jindal Group circumventing Western sanctions?
Especially in view of the fact that the Jindal Group boasts that shipping lines and bank connections to Russia would open up. And in doing so, it is circumventing the very sanctions that the EU, for example, recently imposed. Not to mention the sanctions against stainless steel exports from the EU to Russia, which had already come into force with the 5th sanctions package.
The Indo-Russian love affair could be severely tested if it comes between the hammer and anvil of European and US sanctions. Or the moral concerns of European buyers and consumers.
Is Germany moving ahead with carbon treaties? Is the “toll” slap coming for Habeck?
Germany is the No. 1 steel-producing nation in Europe. And the steel lobby on the employers’ and especially on the employees’ side is very powerful. It is also one of the core voters of the governing SPD party. Steel subsidies have kept ailing steel giants such as the thyssenkrupp Steel Europe group alive for decades.
Germany moves ahead on steel subsidies
Now Germany appears to be once again rushing ahead with steel subsidies, led by the Federal Ministry of Economics and Climate Protection. Federal Economics Minister and Vice-Chancellor Robert Habeck, of the Green Party, had already promoted the carbon contracts last year, which once again promised state subsidies for steel companies that had simply slept through the green transformation for lack of duties.
Rash over-subsidisation of German steel producers?
Now experts are warning that the subsidies worth more than 10 billion euros in connection with the carbon contracts would lead to an over-subsidisation of German steel producers if they were implemented in the planned form. This is because the new subsidies for green steel from the European Union have not yet been finally decided and could come into conflict with the carbon agreements.
Will Robert Habeck’s personal “Scheuer” moment now come?
On the one hand, this could reduce the incentive for steel producers to adapt to zero, and on the other hand, Robert Habeck has the opportunity to create his own personal “Scheuer” moment. The former Federal Minister of Transport Andreas Scheuer, CSU, violated EU law with his hasty introduction of a car toll and caused as yet unforeseeable damage to the German taxpayer.
Nickel and molybdenum – stable at a high level
Nickel has ended its small price correction in Europe and Asia and is currently moving stably sideways. The current profit-taking and speculation indicate that a new run on nickel can be expected in the near future. The latest data from a US authority already indicate that there could be distortions here.
Molybdenum has currently paused after its drastic price increase and is moving sideways at an extremely high level. The impact on 316/316L prices is now clearly noticeable. Molybdenum remains scarce and there is no improvement in availability in sight.
- World nickel production paints dramatic picture
- Stainless steel spot prices unimpressed
- Further price jumps for 316/316L stainless steel
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