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November 3, 2021 – Steel demand is increasing worldwide. One of the reasons is the outlook for 3.3 million tonnes of steel to be sold from Europe to the United States. Asian industries are increasingly coming out of lockdown. Aluminium prices are stabilising. Chinese thermal coal prices up by almost 10%. And the steel industry wants 500 billion euros from the German taxpayer.

Stainless Espresso: Steel demand picks up worldwide
Stainless Espresso: Steel demand picks up worldwide

Steel demand picks up worldwide

Steel demand has picked up as expected in Europe following the EU-US settlement of the tariff dispute. The market assumes that EU steel producers have already reserved capacity to be exported to the United States as soon as the tariff rate quotas for products and EU member states are known. This is likely to reduce availability in Europe and push up steel prices further.

Limited room for political manoeuvre for Europe left

The deal between Europe and the United States, especially with regard to Chinese steel and aluminium exports and the melted and poured requirements for steel, is likely to make it politically difficult for the Europeans to soften further anti-dumping measures – as was recently the case for aluminium.

Asian industries increasingly coming out of lockdown

Several Asian countries, such as Malaysia or Vietnam, report that domestic industries are increasingly coming out of the Corona Lockdown and local steel demand is expected to pick up significantly before the end of Q4 2021.

Russia: High steel demand for HRC and plates

In Russia, steel demand for sheets and plates is currently increasing significantly. In addition, it is reported that the availability of steel is limited. Recently, prices for domestic steel had risen due to Russian export restrictions.

Aluminium market has calmed down and consolidated as expected

Aluminium futures have rallied today on SHFE (+1.6%) and LME (currently at +1.51%) after going through a consolidation phase in recent days. Reports from China indicate that downstream processors are able to work again after the energy rationing and had stocked up on aluminium billets at the lower prices. Energy continues to be the most important cost factor for aluminium. And now that the fall in coal futures has stopped, the market is stabilising significantly, as we expected.

Chinese thermal coal futures up almost 10%

Chinese thermal coal futures on the Zhengzhou Commodity Exchange (ZCE) rose by more than 9.5% today.

500 billion euros for the German steel industry?

During the German parliamentary election campaign, the SPD had already generously distributed billions of euros in election campaign gifts to the German steel industry. The last federal government’s steel action plan also promised billions in subsidies to German steel producers – up to and including the full assumption of costs for emission certificates.

Steel producers position their trade unions

Now the trade unions are starting to make demands of their own, apparently also controlled from the corporate headquarters. They want to modernise German steel with 500 billion euros in tax-financed subsidies and public investments. First and foremost, of course, Germany’s largest steel producer, thyssenkrupp Steel Europe.

Where to put all the money?

With 500 billion euros, not only the entire German steel industry could be completely reinvented, but probably the entire European steel industry. Including some overcapacities. Of course, this raises the question of where all the money should actually go. We will take a closer look at this for you soon.

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