30 May 2023 – Agreement in dispute over U.S. debt ceiling met with positive response. Taiwanese stainless steel producers expect market to stabilize in second half of 2023. Nickel prices rise again. Indonesia to introduce its own nickel index. Important reminder: The European stainless steel industry is not just mills!
US debt ceiling: Agreement in Washington
The U.S. administration led by President Joe Biden and the Republicans led by Majority Leader Kevin McCarthy agreed on the night of Pentecost Sunday on a temporary increase in the debt ceiling until January 2025. The bill must now be passed in Congress.
Overall, the outcome has been positively received so far, even though there are to be some cuts and redistributions in the U.S. budget and Inflation Reduction Act (IRA) and it still needs to be approved by Democrats and Republicans in Congress.
Agreement on US debt ceiling stimulates futures
Due to Memorial Day in the U.S., market reactions to the debt ceiling could only be read in futures contracts, which were slightly up yesterday for both ten-year U.S. Treasuries and the S&P 500.
Taiwan: stainless steel market to stabilize further in H2 2023
Taiwanese stainless steel producers expect the market to further stabilize in the second half of 2023. They expect more calm in the financial markets and further improving confidence in the commodity markets. Positive signals are also expected from China and Indonesia.
Indonesia to introduce nickel price index
According to media reports, Indonesia intends to introduce a nickel price index modeled on other commodity exchanges. This is to meet the wishes of producers and consumers of Indonesian nickel products, who are looking for a stable alternative to the European commodity exchange after the nickel fiasco on the LME in March 2022. Primarily nickel pig iron, mixed hydroxide precipitate and possibly nickel matte are to be traded with the planned index. The index would then also include the Indonesian nickel export tax.
Asian nickel prices rise
Since May 23, SHFE nickel futures have gained nearly 4.5% in some cases. On average Chinese spot market prices for the stainless steel and battery commodity have risen more than 3% since then. Looking at the LME, nickel prices there are also up more than 3%. At the same time, stocks in LME warehouses continue to fall and were only 38700 units on May 26, 2023 – a new all-time low.
European stainless steel industry is not just mills
The European stainless steel industry is often portrayed in the media as consisting only of stainless steel mills. However, it is obviously all too easy to forget that the far greater part of the stainless steel industry is to be found in the processing and downstream sectors.
Politicians ignore SMEs
Where does this come from? Because of the smaller workforces in small and medium-sized companies, politicians tend to ignore them. Large corporations with thousands of employees, on the other hand, are more effective in the media for politicians hoping for re-election or positive opinion polls, for example, than when thousands of SMEs with 1, 10 or 100 employees are at stake.
New demands for even stronger protection of EU mills
For this, one only has to look at the latest statements of so-called experts. One example is the call for further protection of EU stainless steel mills at the BIR Amsterdam Convention on May 22, 2023.
Stainless steel mill lobby already overprotected
Which, in the context of EU Safeguard, anti-dumping duties, countervailing duties, carbon border tax CBAM and billions in subsidies, sounds like sheer mockery in the face of the downstream manufacturing sector in Europe. And raises the question of which side the SMR speaker is really on. On the side of the EU mills, who are already massively protected and have a huge lobby, or on the side of the manufacturing downstream industry?
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