14 March 2022 – Europe now also wants to impose sanctions on Russian steel exports, as the European Commission had announced as recently as Friday last week. Fitch Ratings downgrades 28 Russian commodity suppliers to CC credit rating. And the battle for the nickel continues.
Russian steel exports: European Commission imposes sanctions
The European Commission announced new EU sanctions against Russia as recently as Friday, 11 March 2022. This time also directly against significant Russian iron and steel exports.
Fitch downgrades Russian commodity suppliers
The rating agency Fitch has significantly downgraded 28 Russian raw material suppliers from the energy sector, but also from the steel, aluminium and e.g. nickel industry. According to Fitch, these companies are currently on the credit rating CC “Very high levels of credit risk“.
The Fitch list includes Russian companies such as Gazprom, Lukoil, Severstal, Rusal and Norilsk Nickel.
Stainless Steel: Chinese Prices Rise Again
Chinese stainless steel prices rose again at the start of the week. Some of the stainless steel futures on the SHFE are also up by more than 1 percent.
Battle for nickel continues
The battle for scarce nickel, which had briefly led to nickel prices of more than $100,000 per tonne last week, is going into the next round.
LME nickel trading further suspended
While nickel trading remains suspended on the European LME, the Chinese SHFE has resumed trading. The nickel contracts listed on the SHFE had almost levelled out by the end of the trading day and are still at a very high level.
Lenders and Chinese state rescue Tsingshan
Due to its failed speculations, the nickel and stainless steel giant Tsingshan had to be massively supported and rescued from bankruptcy last week by the Chinese state and its lenders, such as China Construction Bank and J.P. Morgan. For J.P. Morgan alone, it is a matter of possible losses of more than one billion US dollars, as is also heard in market circles, which should thus be prevented.
The call for Tsingshan to divest himself of his so-called “short” positions in the nickel market in order to keep the losses manageable and controllable seems to be bouncing off the company’s founder. He is apparently still convinced that nickel prices will fall.
Drop in nickel prices highly unlikely
In view of the Ukraine crisis, ever tougher sanctions against Russia, the downgrading of Norilsk Nickel’s credit rating to CC by Fitch Ratings and the already existing shortage of nickel, a significant drop in nickel prices seems extremely unlikely at present.
An end to the battle for nickel is not yet in sight.
- Tsingshan had to be rescued by the state
- Europe’s aluminium industry under pressure
- Tsingshan again, speculation costs group at least $8 billion
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