LME nickel shows further volatility
LME nickel shows further volatility

29 June 2023 – The nickel shows volatile, after the court hearing around the manipulations on the LME. Now comes the multimillion dollar damages? Tesla with record second quarter sales in China, but booming Chinese e-vehicle market continues to eat Tesla’s market share. And in the EU Carbon Border Tax CBAM, the next logic break opens up, which should drive the cold sweat on the forehead of wind turbine manufacturers.

LME nickel continues to be volatile

The nickel quotations on the London Metal Exchange have been volatile in the past few days. In particular, since the court hearing last week around the nickel manipulations at the LME. This leads us to conclude that the market is waiting for a verdict in the nickel case.

Will the multi-million dollar damages award go through in court?

If the LME loses the case and is subsequently ordered to pay damages to the plaintiff traders – which we personally believe it should – we believe that the nickel price displayed on the LME is no longer valid.

Another indication that currently the more significant nickel value on the SHFE is to be found in Asia, which had recently significantly widened the gap to European nickel again.

Tesla with record sales in the second quarter

Chinese analysts believe Tesla is likely to have sold more than 155,000 electric vehicles in the second quarter of 2023, surpassing the record result from the first quarter.

Booming Chinese e-vehicle market eats into Tesla’s market share

Overall, however, Tesla’s market share in China continues to decline due to strengthening competition, such as Chinese automaker BYD. Overall, however, these figures show that the market for electric vehicles is booming and what this means for raw material demand, especially for battery raw materials such as lithium and nickel, should be clear to everyone.

CBAM: Next dramatic weakness in the carbon border tax looms large

The European Union needs vast amounts of energy for its green transformation. By 2050, the additional demand for green hydrogen alone could be as much as 1500 GW of renewable energy. Although many member states and the European Union are pushing for faster expansion of wind turbines and solar power plants, the necessary reduction of bureaucracy is already causing problems. In Germany alone, 15,000 wind turbines are hanging in the balance because the necessary permits are missing just for transport.

Wind turbine manufacturers with supply problems

In mid-June 2023, the association of wind turbine manufacturers, WindEurope, had pointed out in a press release that there would be a lack of necessary production capacities and especially also of raw materials for the expansion in the generation of wind power. Even now, turbine manufacturers would have to buy raw materials such as cables, gearboxes and steel towers in China in order to keep up at all. And there would have to be significant investment in expanding production capacities in Europe.

But there are already bottlenecks in Europe’s wind supply chain. Offshore foundation manufacturers and installation vessels are fully booked for several years. The wind industry is having to buy power cables, gearboxes and even steel towers from China. We’re building a few new factories but not enough for the massive expansion of wind energy that Europe now needs.

Source: WindEurope, 14 June 2023

Financial funding insufficient for necessary expansion

In late June, the European Court of Auditors expressed skepticism about the outlook. “There are no signs that sufficient funding will be made available to meet the more ambitious 2030 targets, especially from the private sector,” the Court said. Meanwhile, the EU has already begun discussing climate targets for 2040, even though its 2030 projects have not even been funded.

Industries protected by CBAM are hurting Europe

And while European companies are urgently dependent on imports into the EU, as can be seen well in the example of WindEurope, the lobbying associations of the domestic steel, cement, aluminum and fertilizer industries, among others, are whipping half-baked market protection measures such as the Carbon Border Tax CBAM through the political authorities. Other opinions, practical concepts or simply economically viable solutions were not wanted – a glance at the list of members of the informal CBAM expert group of the European Commission is enough to prove this.

CBAM full of logic breaks

This not only leads to more unnecessary bureaucracy for small and medium-sized companies, but also to huge logical breaks. One only has to mention the dirty hole in the CBAM excemption of ferrous scrap, which, against all logic, was declared CO2-free.

Steel towers for wind turbines subject to CBAM tax

Now, not only the wind turbine manufacturers will be in a cold sweat when they realize that their urgently needed steel towers, which are essential for wind turbines and, as WindEurope complains, now all come from China, will be subject to even more bureaucracy and CBAM taxes in the future.

CBAM must be changed

With the steel towers and scrap, but also the attempt to exclude hydrogen from CBAM, it shows once again that the Carbon Border Tax in its current form needs to be changed and urgently revised before its introduction in October 2023.

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