Nickel Export Ban, Molybdenum and CBAM
Nickel Export Ban, Molybdenum and CBAM

13 December 2022 – As expected, Indonesia has appealed the WTO ruling on the nickel export ban – will the ban now remain in place? Molybdenum prices continue to rise. EU Parliament and member states agree on Carbon Border Tax CBAM. And the LME does not come out of the crisis of confidence.

Nickel export ban: Indonesia appeals to WTO

Indonesia on Monday filed the expected appeal against a World Trade Organization (WTO) panel ruling in favor of the European Union (EU) in the dispute over Jakarta’s ban on nickel ore exports. The WTO said this in an official statement.

WTO Appelate Body unable to act?

This means that the nickel export ban is likely to remain in place until further notice, as the WTO’s Appellate Body is blocked in its decisions due to a lack of judges and has not issued any rulings for three years now.

Molybdenum price continues to rise

Molybdenum prices rose again on Monday and are now more than $57,000 per ton on the LME. Chinese ferro-molybdenum prices also continued to rise sharply today (Tuesday), increasing by about 2.6%.

Prices for stainless steel grades 316 and 316L rise

Molybdenum is used in particular for the production of tool steels and duplex stainless steels, but also in the important stainless steel grades 316 and 316L. Together with the significant increase in nickel prices, prices for 316 and 316L products have risen by almost 14%. There is currently no end in sight to this trend.

Agreement on EU Carbon Border Tax CBAM

As the European Parliament announced today, a preliminary agreement has been reached with member states on the final design of the Carbon Border Adjustment Mechanism (CBAM).

Not all details are known yet, as final negotiations on the design of the ETS allowance trading scheme are scheduled for next Friday and Saturday.

CBAM introduction in October 2023

However, the introduction from October 1, 2023 and the necessary formation of a central EU CBAM authority seem to be already fixed.

Hydrogen firmly integrated into CBAM

Furthermore, at least hydrogen has been firmly included in CBAM regulation. There are indications that, for example, European steel manufacturers will have to use at least 50% green hydrogen in the future.

“To avoid double protection of EU industries, the length of the transition period and the full phase-in of the CBAM will be linked to the phasing out of the free allowances under the ETS. This will be negotiated later this week in connection with the revision of the ETS and the results integrated into the CBAM regulation.”

Source: European Parliament

Allocation of free ETS allowances beyond 2030 rejected?

The much bigger headache is probably that the lobby associations were not able to push through their demand to be able to extend the allocation of free ETS certificates beyond 2030. This is intended to ensure conformity with WTO rules.

This should also confirm the future of Safeguard or a comparable measure. This is because it can be assumed that the lobbyists will run up a storm if anyone tries to repeal one of the existing measures.

LME nickel trading still with problems

Nickel trading on the LME continues to face major problems. Lack of liquidity and volume are cited by traders as the main reason that could potentially restore the lack of confidence in the LME. According to current calculations, the nickel traded on the LME can only cover 20% of the actual volume that would be needed for valid price discovery.

Which is already used by traders as an argument to look more towards Asian SHFE. And to push the Shanghai Futures Exchange as a new central nickel trading place.

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