28 April 2022 – The World Bank has predicted metal prices at historically high levels in 2022 and also in 2023. Ferrochrome prices rise significantly in Europe and Asia. No correction in steel prices expected. And global nickel consumption continues to increase.
Ferrochrome prices rise significantly
Ferrochrome (FeCr) prices have recently risen significantly. Not only in China are the major ferrochrome producers reporting a significant increase in tender prices for May 2022. In Europe, too, prices for FeCr and chrome ore have risen sharply following severe flooding in South Africa in April.
Chrome ore prices in China have increased by more than 25% since the beginning of April. Ferrochrome is up about 9%. And chromium (99%) is up more than 17% since the beginning of 2022 and is only just below the 3-year high of November 2021.
Steel prices remain high
Steel buyers and sellers continue to expect prices to remain high. Demand is good and a correction is not expected in the coming months. In particular, energy costs are expected to remain high for a long time. This is more likely to lead to a further increase in prices.
Global nickel consumption continues to rise
The International Nickel Study Group (INSG) has predicted an increase in nickel demand for 2022 from about 2.776 million tonnes in 2021 to 3.015 million tonnes in 2022. This means that the INSG figures remain almost unchanged from their previous forecasts.
Unfortunately, it is not clear from the press release whether INSG has taken into account the necessary acceleration towards alternative energies with regard to the Russian crisis in its forecast. There is only a brief reference to the increasing demand for EV batteries. The 20-30% increase in demand from Indonesian nickel processors is also rather marginalised by INSG.
If the INSG’s assumptions on the output and consumer side turn out to be only slightly different than predicted, the shortfalls could turn out to be significantly higher than in 2021.
LME chief to stay in office longer
According to media reports, LME CEO Matthew Chamberlain, who was due to leave at the end of April 2022, will remain in his post for longer. It can be assumed that regulators, investors, speculators, traders and the parent company Hong Kong Exchange and Clearing have built up enough pressure that the LME CEO cannot simply leave the lurching ship.
The scandal surrounding the failed nickel deal by China’s Tsingshan Group, therefore, does not seem to be over yet and it is to be expected that some lawsuits will be filed against the LME in court.
World Bank sees commodity prices significantly higher in 2022
The World Bank has predicted in its latest Commodity Markets Outlook April 2022 that commodity prices in 2022 will be significantly higher than in 2021. And that they will remain high at least in the medium term.
The war in Ukraine has caused major supply disruptions and led to historically higher prices for a number of commodities. For most commodities, prices are expected to be significantly higher in 2022 than in 2021 and to remain high in the medium term.World Bank, Commodity Markets Outlook April 2022
Commodity prices up significantly in Q1 2022
Commodity prices rose in the first quarter of 2022, according to the World Bank, reflecting the impact of the war in Ukraine as well as continued growth in demand and various supply constraints.
Energy prices have risen sharply since the beginning of the year
Energy prices have risen sharply since the beginning of the year, with broad-based increases across all fuels; some coal and natural gas benchmarks reached all-time highs in March.
Metal prices remain at historically high levels
Metal prices are forecast to rise by about 16% in 2022 compared to 2021, according to World Bank forecasts, and may soften somewhat in 2023, but remain at historically high levels.
Prices: Nickel +52%, aluminium +38%
Further, the World Bank expects nickel and aluminium prices to rise by 52% and 38% respectively, reflecting Russia’s superior role as a supplier in these markets and the energy-intensive nature of aluminium production.
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