Window open for a deep breath

A spark of hope
It is forgivable to have felt quite uneasy in the last few days, weeks and months if news reports have been followed. There have only been conflicts, problems and challenges everywhere, to an extent never felt before. And on both a national and international level and all at the same time. Furthermore there are no (quick) solutions in sight. Some psychologists have already made recommendations to abstain from the media, so as not to be drawn down mentally and to try to preserve a little bit of optimism.

Nevertheless, gloominess has certainly spread everywhere, which of course does not exactly encourage people to consume and companies to invest. And now autumn and winter are also approaching in the northern hemisphere, accompanied in Europe by poorer weather, shorter days, so less light. However, on the 13th October the release by Hamas of the remaining Israeli hostages in Gaza was gladly reported, which was mainly thanks to the diplomatic efforts of Egypt and Qatar, but also above all thanks to pressure from the USA and its President, Donald Trump.
Should this really be the end of the conflict, ensuring lasting peace and prosperity in the region, then it would be an absolutely brilliant result, and even a Nobel Peace Prize in the next few years would not be too high a price to pay. After all, the Middle East conflict has existed for at least as long as the author has been trying to think. Who would have thought that an agreement could be reached with Hamas, which is hopefully specified in detail and, above all, honoured by all sides.

There is no doubt that peaceful coexistence in all ways will be better for all concerned. Therefore, we should be optimistic, hope and perhaps also pray, that the deep-seated hatred can be permanently overcome. There is a chance, even if there is still a long way to go. And perhaps, even if this maybe a wistful idea, other rulers and despots will be inspired by this example, because people will always be better off in peaceful times, and economies, not only in those countries but also globally, would switch from partial decline to clear growth. This in turn would mean greater prosperity for all and not just for the few who “profit” from wars and conflicts.

Easy come, easy go
Evidently still euphoric from his success in Gaza, President Trump could not resist turning his attention to his great “opponent” China, escalating once more the still unresolved trade and tariff conflict. China’s restrictions on exports of rare earths, which are essential for future technologies, are a thorn in his side. Trump has threatened tariffs of 100% on all imports from China to the USA from 1st November 2025. There is no doubt that numerous issues have to be resolved by the Trump administration and there is not much time to do so, but the President should take a deep breath before firing the next communicative round.

Market participants became much more nervous again with this surprising turn of events at the end of the week, which cancelled out much of the confidence that investors had recently gained. Immediately after the markets’ sharp reaction, the US President backed down again and said that the highly esteemed President Xi had just had a bad moment. He further watered it down by saying: “The US wants to help China, not harm it!!!”

Nickel prices on the London Metal Exchange (LME) followed these developments almost one-to-one and, therefore, remained within the narrow trading range of USD 14,900.00/mt to USD 15,500.00/mt that has prevailed since the summer. Initially, the nickel price for the 3-month futures was able to firm up from USD 15,150.00/mt to USD 15,600.00/mt against the background of the emerging solution in Gaza and a general increase in confidence since 1st October 2025. However, following the renewed escalation with China on 10th October 2025, prices fell again. The trading day finally closed at USD 15,215.00/mt.

However, it should also be made known at this point that, in addition to the geopolitical issues, the purchasing managers’ indices, published at the beginning of October, have unfortunately worsened again in most of the major economies (USA, EU, Germany, Japan and India). At least China and South Korea were able to improve on the previous survey. At the time of going to press, nickel in London was trading at USD 15,160.00/mt.

EU Commission wants to increase protection for the steel industry
The European Commission has presented a comprehensive package of measures in order to better protect the European steel industry from the consequences of global excess capacities. The aim is to secure competitiveness, economic security and the strategic autonomy of the European Union, especially also in view of decarbonisation and the defence sector.

At the centre of the proposal are three key elements: Firstly, tariff-free import amounts should be limited to 18.3 million tonnes a year – this corresponds to a reduction of 47 percent compared to the existing quotas of 2024. Secondly, the tariff rate for imports over the quota should be doubled to 50 percent. Thirdly, the Commission wants to strengthen the traceability of steel products with an additional “melt and pour” reporting obligation and so prevent circumvention.

The President of the EU Commission, Ursula von der Leyen, stressed the strategic significance of the sector: “A strong decarbonised steel sector is decisive for the competitiveness, the economic security and the strategic autonomy of the European Union. Global excess capacities harm our industry – we must act now.”

The new measures should replace the existing EU safeguards, which expire in June 2026. With the early submission, Brussels wants to ensure a seamless transition. The proposal is part of the EU Steel and Metals Action Plan and based on a comprehensive economic analysis as well as a consultation with over 500 industry players, who largely support the proposal.

The background is the continuing global excess capacity in steel production, which is more than five times the annual EU steel demand. At the moment this is about 620 million tonnes and could probably increase to 721 million tonnes by 2027. Since 2007 the European steel industry has lost about 65 million tonnes production capacity, so that the utilisation rate is only 67% – well below the economically justifiable level of around 80%. In total, up to 100,000 jobs have been lost in recent years.

The Commission stresses that the proposed measures are WTO-compatible. Exceptions should be made for Norway, Iceland and Liechtenstein, and the special situation of the Ukraine should be considered. Parallel to this, the EU, together with international partners – for example in the Global Forum on Steel Excess Capacity – wants to work on global solutions to limit structural excess capacity.

As part of the orderly legislative procedure, the proposal must now be approved by the European Parliament and the Council of Ministers following appropriate consultations. If the regulation comes into force as planned in 2026, it should provide the European steel industry with more stability, investment security and planning prospects. 

State fund Danantara sets an example: Project worth billions for nickel and a hard line against illegal mines
The Indonesian state fund Danantara has signed an agreement in principle worth 1.42 billion USD with the Chinese company GEM Co. Ltd. The aim of the investment is a new plant for the production of battery-grade nickel in Sulawesi. The so-called High-Pressure Acid Leach (HPAL) plant will be built jointly by GEM and PT Vale Indonesia and should supply around 66,000 tonnes of nickel in the form of mixed hydroxide precipitate per year – a key raw material for batteries in electric vehicles.

Danantara’s participation lends particular weight to the project, as the fund is one of the key initiatives of President Prabowo Subianto and has managed assets of around 1 trillion USD. Up until now, Danantara has mainly concentrated on collecting dividends from state-owned companies, credit lines of international banks and the planned sale of so-called “patriot bonds”. Larger operational engagements have been rare – so far, only a 405 million dollar loan to the state-owned airline Garuda Indonesia was one of the more significant transactions.

With its access in the nickel business, Danantara is strengthening its role in a sector that is of strategic importance to Indonesia: The country now accounts for more than half of global nickel supply. Just recently, the fund also signed a letter of intent with the French nickel producer Eramet SA to explore possible co-operations.

At the same time, the government is also pushing for a tighter control over raw material and agricultural industries in its own country. From the 1st September a special forestry task-force will take action against mines without valid permits in about 4.27 million hectares of forest. The same unit had already started a disciplinary operation in March against illegal palm oil plantations and confiscated around 3.3 million hectares, part of which was transferred to the new state-owned company Agrinas Palma Nusantara. Companies which operate without a licence are to return part of their profits to the state. In its role as the world’s leading producer of nickel, coal, tin, copper and palm oil, this underlines Jakarta’s claim to increase its national control.

Despite massive reserves, the industry is under pressure: nickel prices, as a consequence of Indonesia’s oversupply, continue at a relatively low level and increase the pressure on producers worldwide – even HPAL plants are seeing their margins dwindle. Yet the present engagement is seen as a clear signal that Indonesia wants to expand its role as a key player in the global battery market.

Shanghai Exchange seeks global influence in nickel pricing
The Shanghai Futures Exchange (SHFE) is considering opening its existing Chinese nickel futures contract to foreign market participants and investors still during 2025. The Exchange is, therefore, pursuing the goal of expanding its international presence and positioning itself as a serious alternative to the London Metal Exchange (LME). Qualified foreign institutional investors could have access to the existing SHFE nickel contract without the need for an additional contract.

Since the trade chaos on the LME in March 2022 when nickel trading was suspended for eight days, many market participants have been searching for reliable alternative for the pricing of this strategically important metal. The incident led to a huge loss of trust after the nickel price temporarily went over the 100,000 USD per tonne level and all trades which had been concluded were cancelled. Hedge funds such as Elliott Associates then filed lawsuits.

Even if matters since then have more or less normalised again in London, also because of concentrated work by the Exchange, China sees an opportunity in admitting foreigners as a way of strengthening its own market position in global metal trade. The opening of the SHFE contract for international investors should take place via the QFII Programme, which currently has around 900 registered investors. Of these, about 200 to 300 have a keen interest in commodities, according to brokers. In February 2025 the SHFE-Futures had already made stainless steel and heating oil available to QFIIs.

On the fringes of the LME Asia Week in Hong Kong at the end of May, the SHFE held a two day industry meeting in Shanghai, where plans for the nickel contract were to be intensively discussed. An official confirmation or statement by the SHFE or the Chinese Exchange supervisor (CSRC) has not yet been made. The CSRC does, however, basically support the internationalisation of the Chinese Futures markets, in order to attract more and more foreign capital and so also increase the Exchange liquidity.