4 July 2022 – EU member Netherlands will need up to 33 million tonnes of raw materials – especially steel, aluminium and nickel – in the coming years to achieve the Green Energy Transformation. A study from 2020 and a recent white paper from 2022 lead to the conclusion: without imports of metal it will not work in the next 20 years. And the nickel market is looking for a new pricing mechanism.
Nickel in search of a new price mechanism
Since the turmoil in the nickel market in March 2022, nickel trading has not really recovered. The LME in particular has had to deal with severe liquidity losses in trading of the stainless steel and battery commodity since then. Attempts to lure traders to the SHFE do not seem to have really worked.
To hedge against losses in long-term contracts, large consumers had so far hedged themselves via the major commodity exchanges with corresponding bets on rising or falling prices.
Urgent need for more realism in the market
In any case, the market seems to be in urgent need of a new price mechanism while the sell-off on the LME continues. Another problem is that only nickel metal is traded on SHFE and LME, while much of the market uses less processed nickel products, such as sulphates, matte or NPI, and thus cannot really be compared.
Limit the influence of hedge funds?
So far there seem to be only ideas for a new price mechanism. Concrete proposals are still missing. And, considering the shareholdings of large financial service providers and hedge funds on the commodity exchanges, they must be decoupled from them in order to better prevent market abuse, price fixing and insider trading in the future.
Study: Netherlands needs up to 33 million tonnes of metal
According to a study from 2020, EU member state the Netherlands alone will need up to 33 million tonnes of metal in the next few years to achieve the green transformation in the energy sector. Steel, aluminium, copper and nickel account for 94% of the total quantity. Primarily to produce wind turbines and solar panels. And a current 12 MW wind turbine weighs at least 1,500 tonnes.
Europe does not have enough capacity
A recent white paper by Leiden-Delft-Erasmus Universities, which refers to the data of the Metabolic study, also comes to the unsurprising conclusion that Europe and the European Union do not have sufficient production capacities or own reserves of key raw materials such as nickel and rare earths.
This leads to the conclusion that the transition to sustainable energy production in the Netherlands and Europe in the coming years will only be possible through imports of raw materials such as steel and aluminium.
The development of new mines and suitable refineries in Europe is expected to take at least 20 years, according to the studies.
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