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November 4, 2021 – US Federal Reserve announces start of tapering. Financial aid to end by mid-2022. Market reacts positively. Stainless steel demand in China picks up due to good sentiment. EU and US aluminium associations dissatisfied with quota solution in steel and aluminium dispute.

U.S. Federal Reserve to curb stimulus aid
U.S. Federal Reserve to curb stimulus aid

U.S. Federal Reserve to curb stimulus aid

The Federal Reserve (Fed) announced Wednesday, Nov. 3, 2021, a $15 billion reduction in its current $120 billion per month of stimulus-supporting securities purchases in November. With the program, the Fed is pumping additional money into financial markets to keep borrowing rates low and stimulate the economy. If all goes according to plan, this should end in mid-2022. Subsequently, it is expected that there could be a slight first interest rate step at the end of 2022. Currently, the recommended U.S. federal funds rate is 0 to 0.25%.

Positive market reactions on FED decision

The major markets in Europe, Asia and the United States and the related indices, such as Dow Jones, Nasdaq, Nikkei, Hang Seng and DAX, have reacted positively to the expected Fed announcement to start tapering. Also the commodity values on the London Metal Exchange show today friendly. Overall, the markets seem to expect further growth and thus increasing demand.

Positive sentiment: Chinese demand for stainless steel picks up

After Chinese stainless steel producers published their key prices on Wednesday, supplies on the market have stabilized. And demand from the downstream industry is picking up due to good sentiment. Transactions are expected to increase further in the coming days.

US and EU aluminum associations unhappy with quota solution

European Aluminum and The Aluminum Association are unhappy with the EU-US negotiated solution to the aluminum and steel dispute between the two blocs.

Tariff rate quotas threaten free trade

The introduction of tariff rate quotas (TRQs) on aluminum would only create further market instability, according to the associations. Long-standing value chains between Europe and the United States would now be jeopardized. In addition, further countries worldwide could resort to TRQ regulations, thus endangering fair and free trade.

As we had already assumed, the EU-US solution in the steel and aluminum dispute will not only lead to cheers. Aluminum producers are therefore likely to have been only the first to take an active stance against this solution.

Steel producers welcome TRQs

The steel associations EUROFER (EU) and AISI (US) had welcomed the TRQs in return. The Europeans in particular should be pleased that they can now sell capacities to the United States.

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