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Stainless Espresso: Steel sanctions, nickel and US interest rate hike
Stainless Espresso: Steel sanctions, nickel and US interest rate hike

17 March 2022 – The EU has imposed sanctions on steel from Russia and Belarus. At the same time, it has redistributed Safeguard quotas on certain steel products for these countries. The nickel trade remains the dominant topic on the LME. And the US Federal Reserve raised the key interest rate to 0.5%.

Steel sanctions against Russia and Belarus, Safeguard adjusted

The European Commission (EC) has imposed sanctions on steel from Russia and Belarus due to the military conflict in Ukraine. In return, it has now also adjusted the existing EU Safeguard measure on certain steel imports.

Steel tariff rate quotas adjusted proportionally

The country-specific tariff rate quotas were distributed proportionally to other exporting countries affected by Safeguard. The EC used the latest available data from 2021 as a basis. This is to ensure a sufficient supply of steel and steel products on the Union market.

Current developments on the LME

We continue to closely monitor developments on the LME. At the start of trading today, there was another downward technical correction in the nickel price. This puts the price on reserve at around $42,000 per tonne of nickel, roughly where it was on 7 March 2022.

LME, HKEX and J.P. Morgan

Just yesterday, the London Metal Exchange, which since 2012 has been owned by Hong Kong Exchange and Clearing Ltd. (HKEX) since 2012, announced an adjustment of the daily price limits for nickel from 5% to 8%. Currently, efforts are still being made to clean up the chaos that was triggered by the Chinese Tsingshan Group on the nickel market.

J.P. Morgan significant shareholder of HKEX

First and foremost is the financial services provider J.P. Morgan, which is a significant shareholder in the HKEX and thus also in the London Metal Exchange. At the same time, J.P. Morgan is apparently also the financier of the nickel deals and the now necessary rescue of Tsingshan and is in the fire with at least one billion dollars in this incident.

US Federal Reserve adjusts federal funds rate

The US Federal Reserve announced yesterday a 0.25 point increase in the key  federal funds rate to 0.5% to counter the high inflation of 8% recently in the United States. At the same time, the American economy is humming along at a high level.

Most recently, the unemployment rate had fallen to 3.8%, which can be considered full employment. Moreover, 11 million job openings were registered on the US labour market.

The strong demand for labour also reflects strong demand for goods and services, suggesting that the U.S. economic recovery is still strong.

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