Who's been tweaking the nickel?
Who’s been tweaking the nickel?

15 November 2022 – Rumours and speculation about yesterday’s jump in the price of nickel are currently all over the media. A look at the possible causes. Stainless steel and stainless steel scrap prices on the rise. And the European Round Table (ERT) for Industry refers to the Stainless Espresso.

Who’s been tweaking the nickel?

As reported yesterday, nickel had a turbulent day in yesterday’s trading on the European commodity exchange. While it buckled briefly after the start of trading, it jumped more than 15% within a very short time, hitting the daily limit. Overall, the day remained volatile for the important stainless steel and battery commodity. In the end, however, it exited the trading session with a healthy gain of more than 5%.

What all the rumours are about

A lot of speculation in the market and media suggests that the cause of the rapid rise does not seem to be entirely clear. Traders would have changed bets on nickel from loss to profit, a nickel mine negotiated with Tesla Group had to cut production due to a leaking dam, historically low inventories on the LME, Elon Musk surprisingly as an online guest and speaker at a G20 event, billions invested in Indonesian nickel smelters and the rumour in the Chinese media that there was an explosion in Indonesia at a small Nickel Pig Iron plant.

Tsinghsan, Big Short and the beloved press releases

The last point in particular makes one prick up one’s ears, as the nickel market has already been manipulated in one direction or another several times in the past by such rumours, press reports and events. All in all, the rumour about a possible explosion in an Indonesian nickel pig iron plant smells of the trader Big Short, who is linked to the Chinese stainless steel company Tsingshan.

This makes one wonder whether someone might have been trying to recoup billions in losses from the failed nickel deal in March 2022.

Stainless steel and stainless steel scrap prices on the rise

The misleading attempts of some industry journals to artificially drive down the prices of stainless steel products and stainless steel scrap finally seem to be abating. Another industry publication has now had to concede and confirm our expectation, already expressed weeks ago, that not only nickel prices have risen significantly, but also the prices for stainless steel products and scrap are affected by this.

ERT issues warning on industrial competitiveness

ERT, the European Round Table for Industry, has published a warning on industrial competitiveness in Europe in October 2022. We are pleased that a recent Stainless Espresso from steelnews.biz is mentioned in it.

However, we would like to make a few important comments and additions.

  1. ERT confirms in the report that there is only one major plant for the production of Direct Reduced Iron (DRI) in Europe. Moreover, this plant is currently being shut down by ArcelorMittal. However, DRI is, according to common scientific, economic and political opinion, the key factor for the production of CO2 neutral steel, along with green hydrogen. How a DRI plant with a current maximum capacity of 400,000 tonnes per year is supposed to get European steel green is unfortunately not answered. No wonder, since there are only homeopathic amounts of green hydrogen and green DRI. More than an announcement of wanting to produce 100,000 tonnes of CO2 neutral DRI is not forthcoming from there.
  2. CBAM and free ETS certificates: The steel lobby is currently trying desperately to prevent the necessary reduction and ultimately abolition of the free European ETS certificates. They also want to close loopholes in CBAM that allow dirty products to be imported into the EU. One of the biggest loopholes that the steel lobby lobbies into CBAM, which we have pointed out several times, has already been closed by the EU parliamentarians: Hydrogen and DRI from environmentally harmful production are now also to be covered by CBAM. If the EU were to strive for a real level playing field, raw materials such as nickel, iron ore, bauxite or alumina would also have to be more clearly covered by carbon border taxes in CBAM.

Our conclusion on the ERT warning

These are only the two most important points that should not be left uncommented upon with regard to steel. It is also important that ERT tries to make it appear that Europe has already significantly changed its steel production to more climate-neutral production processes. This is simply a distortion of the facts. The bulk of European iron and steel production still comes from the classic blast furnace, especially from steel giant Germany. Real change has not yet set in, even if the PR departments of the big steel producers try to suggest otherwise.

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