The dollar is dead, long live the dollar

Consistent action looks different
After a very meagre 2025 for the industry and the steel and stainless-steel sector – it can certainly be described as one of the most challenging of the last 25 years – there were signs for recovery at the start of the year. Since the 28th February 2026, however, the question is whether the recently much improved Purchasing Managers Index will remain unaffected by the events of the start of bombardments of Iran by the USA and Israel, and also the corresponding counter attacks on many countries in the region.

In principle, the importance of the Middle East on the global economy is relatively manageable and so the direct economic influence is probably limited. However, economic analysts are paying a lot of attention to the region, since there are, nevertheless, some commodities, above all crude oil, but also, for example, sulphur, which could have an indirect influence on the future development of the global economy through shortages, rising prices or disrupted supply chains.

The fact that the American President plays down the situation by saying that the USA, as biggest oil producer of the world, will make a huge amount of money from the rising prices, does rather miss the point. It would not just be the USA which would profit, but also, for example, its biggest opponent, Russia. And the windfall profits for the big oil companies, refineries, and petrol companies, do not help the public, who must now pay at times over Euro 2.00 per litre for regular 95 octane petrol at German petrol stations (compared to just over Euro 1.60 per litre at the end of 2025). The private consumer no longer has the cash and purchasing power disappears.

Consequentially, the biggest fear primarily among the economists is a reduction in spending by private households, so the oil price is being watched anxiously. Nevertheless, Brent crude has catapulted from around USD 60 per barrel to over USD 110 per barrel within a very short time. Also, the fact that the USA and its partner are visibly looking for damage limitation shows that this is not just a trivial matter.

The production quotas from other producing countries, such as Saudi-Arabia, should be increased in order to increase supply. Furthermore, the USA is proposing the escort of tankers through the Strait of Hormuz, enormously important logistically for oil deliveries, but which Iran has possibly mined using it to put strong pressure on its military opponents. And finally, it speaks volumes when the US administration now allows American companies to buy Russian oil for a certain amount of time. Until recently, tankers of the Russian “shadow fleet” were being intercepted by the American military in order to prevent the circumvention of sanctions.
Presumably, it was not just the Ukrainian President Zelensky who had to pinch himself into believing the announcement of the new ruling, which effectively undermines existing sanctions. While the disruption may be helpful to awaken governments in all parts of the world from their deep sleep and lethargy, a systematic and consistent action looks different.

US dollar is not dead
But there has been another lesson learned through the outbreak of the war. While the media in the USA had claimed that the deliberate unpredictable behaviour under the Trump Administration would cause an immense loss of confidence by the international financial markets, and would put into question the position of the US dollar as reserve currency and “safe haven”, it can confidently be confirmed that the US dollar is not dead, and has even strengthened against nearly all other currencies since the outbreak of the crisis. Market participants obviously do not judge the USA by the latest actions of Donald Trump alone, but still continue to be convinced that the checks and balances in the country are still functioning.
Without question, it is, however, different now than in the past. It also probably plays a part that at the moment, there is no other liquid currency of sufficient importance, which would be suitable as an alternative “safe haven”. And gold alone, which does not give steady yields, is not an option either.

This does not change anything in the slowly changing shift of importance from the USA and Europe in favour of Asia, which is also linked to the ongoing transformation of global economic (and military) balance of power in favour of Asia. This is only a question of time due to the high growth dynamics in the new Tiger States and China.

The nickel price on the London Metal Exchange (LME) has, up to now, remained relatively unimpressed by events, with just the exception of quick “risk-off” reactions in the first days after the outbreak of yet another war. At the time of writing, the price for the three months future was at USD 17,300/mt and, consequently, higher than the average price in February 2026 of USD 17,133/mt. In the medium-term prices are fundamentally, for many reasons, well supported, as can be read in the following paragraph. The forecasting uncertainty is probably more on the higher side.

This is unless the war spreads into an endless conflict in the region, with corresponding direct and, above all, indirect consequences for the global economy. And so, it can only be hoped that the suffering of the people, not only in this conflict, but in other wars taking place, soon comes to an end. Some long-term observers of the political situation in Iran can imagine the present government being overthrown on or after Saturday the 21st March 2026, which signifies the end of the Islamic fasting month Eid al-Fitr or Hari Raya.

On this day trouble has been seen in the past, which would now have an impact on a much weaker government, with a religious leader who has so far been more of a phantom, or not even appearing at all. A genuine international plan on what happens after an overthrow, does not, however, seem to have been drawn up.

Climate tariff casts a shadow also on stainless steel
In 2023, the European Commission had already introduced the Carbon Border Adjustment Mechanism. It is a climate instrument which requires importers of certain energy-intensive goods to pay a duty in order to create fair competitive conditions. European companies must comply to the EU-ETS, the European Emission Trading System. The EU-ETS functions according to the so-called “Cap and Trade” principle. A maximum (cap) is set on the total amount of greenhouse gases which can be emitted by all installations participating in the emissions trade. The member states allocate a certain amount of emission allowances to installations – partly without cost, partly through auctions. One allowance permits the holder to emit one ton of carbon dioxide equivalent (CO2-eq.). The emission allowances can be freely traded on the market. Through this, a price is formed for the emittance of greenhouse gases. This price provides the incentive for those participating companies to reduce their greenhouse gas emissions.

At the start of 2026, the CBAM was fully implemented and so came into effect, meaning that it was no longer limited to reporting requirements and data collection, but also involved the obligation to pay carbon tariffs. At the moment, the CBAM is targeting mainly base materials such as aluminium, cement, electricity and steel. Importers pay a CO2 price for emissions which are tied to these goods, analogue to the materials produced in the EU which are subject to the EU-ETS. The stainless steel industry is affected, above all, by commodities such as FeCr, FeNi, and also NPI (nickel pig iron) criticised because of its poor environmental impact, but even by intermediate and finished products like slabs and coils. The result is that these products become more costly and each importer must set aside a certain amount to pay for the arising CBAM charge when it is due.

Return of the fund ensures a revival
The London Metal Exchange (LME) is experiencing a remarkable revival at the moment. After the confidence crisis from the nickel fiasco in 2022, which almost at one time pushed the highly traditional Exchange to the brink of irrelevance, it recorded a record trading volume in 2025. Especially in the fourth quarter there was a significant increase of speculative capital which raised trading of industrial metals to new levels (see also the previous chapter).

A core driver of this development is also the increasing caution on the physical metal markets resulting from the political trading measures of the US Government under Donald Trump. Import tariffs – already implemented on aluminium and threatened on copper – have brought global supply chains into turmoil and caused massive arbitrage movements. Copper is still diverted to the USA from other regions of the world, since market participants are betting again on possible punitive tariffs on refined copper. A decision on this is expected in June 2026.

This conflict situation has also especially enlivened copper trading on the LME. The average daily turnover rose by 12% on a yearly comparison in 2025. At the same time the most important US copper contract on the CME Group lost considerable appeal: The extreme price swings between London and the USA led to a 33% reduction in trade activity. This was compensated in part, however, by a sturdy increase in certain aluminium contracts, which profited from higher US tariffs.

The actual turning point for the LME has been, nevertheless, the return of institutional investors. Since September funds have been massively flowing into the base metal mix once again. As well as a spillover of euphoria from the stainless metal sector, new record levels in copper also played a role, as well as hefty price rises in almost all other LME metals. In the fourth quarter the trading volumes of copper and tin reached the highest levels in over a decade, while nickel recorded its strongest year since 2019 – a clear signal of the regained trust in the London market.

The speculative enthusiasm has not just been restricted to the Western hemisphere. In December in China, there was also an absolute trading frenzy on the SHFE. After an initially weak year, turnovers exploded: Aluminium and nickel reached multi-year highs, while copper had so much activity not seen since 2015.
Tin was especially remarkable, as just in December alone nine million tonnes were traded. Even though the state supported China Nonferrous Metals Industry Association (CNIA) warned of an “irrational” price rally, the markets remained unimpressed.

Speculative activities also increased in the USA, albeit mainly in smaller copper products, aimed at private investors on the CME. This should act as a caution. The micro-copper contract recorded an increase in volume in 2025 of 20% on a year-on-year comparison. In addition, the copper-event-option, introduced in 2022 reached a higher trading volume in December than in the whole of 2024 and served as an access instrument for investors who had previously mainly been active in the stainless metal sector.

Nationwide review: Indonesia shuts down dozens of coal and nickel mines
In October we reported on the billion project by the Indonesian State Fund, Danantara, in the nickel sector – accompanied by an increasingly stricter state control in the raw material sector. The government is now continuing on this course by taking certain measures in the environmental area.

The Indonesian Environment Ministry has ordered 36 mining companies to cease activities immediately. The reason behind this is the suspension of their environmental licences due to a lack of wastewater discharge permits. Without these crucial permits the companies concerned – mainly from the coal and nickel mining sectors – are not allowed to carry out operational activities.

Environmental Minister, Faisol Nurofiq, explained that several companies have not met mandatory environmental standards, particularly in wastewater management. The Ministry has also initiated civil proceedings against around 30 companies and is seeking damages totalling between 5 and 6 trillion Indonesian rupiah (approximately 297 to 356 million US dollars). The allegations relate to environmental damage caused by inadequate or unauthorised wastewater disposal.

Parallel to this, the Forest Area Enforcement Task Force is also intervening: A goldmining concession in Palu has been withdrawn after suspected unauthorised deforestation was discovered within the concession area. The operator is PT.Citra Palu Minerals. The company confirmed the closure of the site, but rejected the responsibility for the deforestation. According to the minister, the concession is located above the city of Palu, which is why continued operations could pose significant environmental risks with a potential disaster. A comprehensive environmental assessment will now evaluate possible risks and the countermeasures necessary.

These latest measures form part of a wider national review of the raw materials sector. Until now, around 250 companies in 14 provinces have undergone an environmental assessment as part of the government’s regulatory programme.