“AI-language” tells the truth

Industrial metal prices on the upswing
China has not been out of a crisis for quite a while, but there are increasing signs that things are improving in the country. And not only according to the saying, what goes down, must come up. Market observers, such as Shanghai Metals Market, expect a significant increase in production and demand for stainless steel in March. While the measures spoken about and taken by the Chinese government last year to stimulate the economy were often criticised as being too weak, there was perhaps also too much impatience for an improvement to happen quickly. After all, fiscal or monetary policy measures always need a certain amount of time before they actually take effect in the real economy. And this now seems to slowly be the case in China. Even if the published data is not positive all the way though.

But in the meantime, prices for industrial metals, for which China is the world’s biggest consumer, have risen across the board: For example, copper (3 months quote on the London Metal Exchange) in the last few days has reached prices of just short of USD 9,800.00/mt or a plus of 11.4% after a low at the start of the year of below USD 8,800.00/mt. Aluminium does not look very different, with a high so far of USD 2,700.00/mt, after a price of under USD 2,500.00/mt at the beginning of January 2025.

And, after quite a while, the alloy metal nickel, so very important for the production of stainless steel, could reach prices again of USD 16,500.00/mt and more (price on 2nd January 2025 at USD 15,035.00/mt). This relates to an increase of almost 10%.And this is despite a relatively unfavourable supply/demand ratio because of the surplus production of nickel pig iron (NPI) in Indonesia, and a lower than expected demand for nickel in battery production for electro vehicles, although sales figures have recently improved a little here (with the exception of Tesla).

Numerous questions arise about NPI
As far as NPI production is concerned, there are increasingly more question marks visible and not in regard to the well known, although often suppressed, environmental problems, climate change and the destruction of biodiversity. Also the economic and technical sustainability can be queried. For example, the media recently reported about the Indonesian producer PT Gunbuster Nickel Industry (GNI) which was facing a difficult economic period because of the low NPI price, and had not been able to pay invoices for ore deliveries and energy anymore. The production outage caused by this must have given reason for some consumers to have broken out into a sweat.

By court order in China, GNI’s parent company, Jiangsu Delong Nickel Industry had already had to enter into compulsory restructuring last summer. It is already quite well known that Chinese-Indonesian conglomerates all too often orientated towards size (remember “Big Shot”), output and employment, than any economic realities. They should, however, since outside of China and Indonesia no viable sales markets have developed.

Looking at the full costs, which do not just consider the pure procurement price, there is no cheaper and more sustainable raw material for stainless steel production than the high quality recycling raw material of stainless steel scrap. Anything else would be a surprise in terms of pure arithmetic and economic logic unless the market is distorted artificially. Stainless steel scrap is, and will remain the cheapest and best raw material alternative. This does, however, not change the fact that scrap is also a scarce commodity in the short term and at present cannot cover the global needs of steel production.

In the last few years the Indonesian NPI industry has ousted competing markets on the basis of the seemingly low production costs and is described as booming. Dozens of domestic NPI projects have been commissioned which has led to the dilemma, aptly described by Bloomberg in the headline “Indonesia’s Nickel Boom Is Forcing Its Own Smelters To Shut Down”.

The oversaturation of the NPI market in connection with the reduced quotas for nickel ore and the long period of weaker consumer demand for stainless steel, especially in China may have created the perfect storm for the Indonesian sector, but there is no doubt that Indonesia will continue to be significantly important for the nickel market.

The weakness of the US-dollar is also a cause
Certainly, the rise in industrial metal prices is to a certain extent due the role played by the massive dollar weakness within such a short period of time, from below USD/EUR 1.025 to over USD 1.090. Like the equity and capital markets, the currency markets do not seem to be entirely convinced of the infallibility of the new and old American President in questions of economics. At the beginning of March it also became known that the first phase of recapitalisation of the six biggest (state-owned) banks could have begun after the issue of corresponding bonds by the Chinese government for refinancing was announced.

These plans were already announced last September, with the aim of redeveloping the bank balance sheets which had been hit by the real estate crisis, by increasing profitability, as well as an increase in lending to companies. It could now be asked whether the recapitalisation is really good news or if it is not just revealing the true extent of the problems. Looking at it as a whole, and with the consumer and investment restraint in China, it can probably be regarded as a more positive piece of information to which the markets have already reacted.

Realpolitik suppresses cloud cuckoo land
As various developments in the USA, Europe and Germany show, the wind has changed for political institutions within a very short time. A global policy change could almost even be spoken of. Transformation, energy change, migration and recently also military defence are important topics and remain so and must be resolved. But without funds the challenges being faced cannot easily be tackled. And now that most political decision-makers have come to, or rather returned to, this realisation, they want to pay more attention to corporate interests again in order to revitalise the battered economy.

After all, without corporate profits on which taxes are also paid, important state income is missing, because it will not be possible to rely on new debt alone. A restructure of priorities is, therefore, unavoidable. This is, however, another matter whether this means that the initiatives to commit to zero emissions, which were highly praised until recently, by also many major American banks and investors, will have to be abandoned in droves and quite abruptly. This has an unfavourable taste about it, as far as the previous lip service and declarations are concerned.

The good news in all of this in regard to the important transformation and decarbonisation is that the circular economy is not only a massive effective instrument in reducing energy consumption and thereby also reducing carbon emissions, but above all, it is very affordable. As mentioned above, scrap material (and this is not only theoretical) is always the cheapest and at the same time most sustainable commodity in steel production.

Therefore, there can be no doubt that steel recycling – despite possible temporary less ambitioned environment goals of leading economic nations – also continues to make a contribution to climate change protection, and at very competitive and attractive economic conditions. For this reason, no thoughts need to be made about the existence and importance of this sector in the coming decades and probably even centuries.

It is certainly justifiable to take a little more sceptical view on whether this is also valid for green hydrogen or technologies for carbon storage after the confirmed reality shock regarding costs and competing tasks. In the coming years and times of scarce financial resources, everything will be put to the economic test, where basically already every investment by companies and the state belongs, unless it is politically mandated.

Siemens CEO demands a new operating system for Germany
In an article in the Frankfurter Allgemeine Zeitung (FAZ) of the 7th March 2025, the Siemens CEO, Roland Busch called for an urgently necessary political change in Germany (author’s comment: and perhaps also for Europe). In his opinion, and who would contradict him, is that money alone is not enough to solve the problems. Busch holds much more the view that “Germany need a new operating system – one that is consistently designed for growth, technology and competitiveness”.

In this context he put together ten goals for Germany, which should create new dynamism. The course must be set by the new government which is presently in coalition talks. The strategic goals, which naturally still have to be subject to measures for implementation, are as follows:

1. Bureaucracy reduction, digitalisation, deregulation, 2. Secure competitive energy prices, 3. Promotion of future technologies, bringing them quicker to the market, 4. Shape sustainable transformation pragmatically and be open to technology, 5. Modernisation decade for infrastructure, 6. Strengthen security – strategically and on a European level, 7. Attract more skilled labour to Germany, 8. Lower corporate tax, facilitate investments, 9. Pragmatic trade agreements, without ideological overload,10. Finally create a single, genuine European market.

In the FAZ article, the individual points are discussed further, but just by taking the goals, it is evident that the challenges are comprehensive. It would be heartening if this new German government makes progress on at least a large part of these goals and does not lose itself in internal party fights or empty words without real action.

What Roland Busch, who also holds the office of chairman in the Asian-Pacific Committee of German Business, could have stressed more strongly is that in South East Asia there are numerous possibilities for German (and European) companies in particular, both in trade and as locations for sales, service and production. Successful business models, such as climate protection and the circular economy could be exported to the benefit of everyone.

The free trade agreements referred to in goal 9 gives out an important signal, but it is by far not everything that can and must be done. Dynamic foreign markets provide an important option and perspective not only for big business, but also for small and midsize enterprises (SMEs) for them to be able to grow stronger and quicker than is possible in the post-industrial markets of Europe. It is now common opinion that it is not sensible and sometimes also very risky to concentrate primarily on the big players, such as China, as has been widely propagated in the past.

In order to bring this more to the attention of the broad business community and the SMEs in particular, it is necessary to provide openly accessible information about the opportunities and possibilities of ASEAN states, such as Thailand, Malaysia, Singapore, Indonesia and Vietnam. Chamber organisations alone cannot provide this. In fact, there has to be a combination of public and private initiatives and placements.

In particular private, cooperative and savings banks have the trust of SMEs and could become much more active. Investment and trade promotion organisations and international and local banks from the target countries should certainly also be included in order to facilitate market entry for companies from Germany. It is hard to believe that the Federal Government has actually only just started again in the last two years to establish relations and consultations with the states of South East Asia.

Germany’s reputation in these countries is still very good, although it has become slightly tarnished after the years of the so-called traffic light government. But there is no more time to waste. Competition, also from other foreign investors, and especially such as those from China, continues to grow steadily and considerably. And with this in mind, the closing statement in the Siemens CEO’s article is again very pertinent, if not to say universal, when it is about the need to create a quick transformation in Germany: “The world will not wait for us”.

Africa: United States of America and China
Since day one of his second term of office in the White House, Trump’s message to the world is clear. He will promote the interests of the United States using any means he can. Reuters wrote: “The message is extremely clear: Either you are for the United States or against it”.

At the African Mining Conference at the beginning of February this year in South Africa one of the main topics was the question of how to move forward while the United States was preparing for tariffs and a trade war with some of its biggest trading partners. According to Reuters, most of the African nations who are rich in mineral resources prefer to stay neutral, but the USA and China are both knocking at the door because they wish to expand their range of influence.

It can be difficult to find the right partner, and neither the United States nor China is the ideal partner for countries which want to safeguard their independence and promote economic development. China invests in African mining and the development of local infrastructure, but does prefer to have control over operations and export the raw goods, which restricts the domestic value creation, while the United States offers an unpredictable business relationship.

Ultimately China and the United States could force the countries to make a decision for one side or the other, if it’s about access to the continent’s numerous resources. However, Indonesia’s nickel industry could serve as an inspiration for many, since the export of unrefined nickel ore was originally completely banned. In return, the Indonesian government guaranteed foreign companies access to these resources in exchange for their investment in the domestic value creation through downstream areas.

Copper tariffs will probably damage US industry
Since President Trump’s election in November of last year, tariffs have become a big issue throughout the world of raw materials and volatility is now imminent. If the economic uncertainty of last autumn was already a challenge, then in the present climate it has certainly not become easier for companies, and this also applies to US companies. Even if President Trump may have the intention of protecting the interests of the USA, tariffs on materials such as copper can have a detrimental impact.

Copper is a corner stone of the US industry, since it supports the manufacturing industry, the construction industry and the transport sector. The input costs for producers who are dependent on copper, will increase and they will fall behind other countries with lower costs. In order to offset the prospects of a loss in supply, President Trump announced that domestic copper production will be further expanded. In view of the fact that the USA is dependent on imports for half of its copper requirements (US Geological Survey) and it could take years to revitalize the industry and make it part of the supply network, it is improbable that the USA can compensate for supply in the short term.

Artificial intelligence tells the truth?
In the FAZ magazine column Frauke Steffens deals with AI truths. In previous editions the publication had already addressed the whole spectrum of artificial intelligence quite critically, or it should be said, quite controversially. In the meantime, there are doubts on the stock markets about the sustainable economic success of the strongly hyped American shares in this business sector, due to (Chinese) competitors also emerging.

Now, one does not have to go as far as some market observers who are already predicting that the AI bubble will burst causing the next big crash in the USA, but a certain amount of healthy scepticism has always been more than appropriate. Incidentally, things are so technically complex that neither the average analyst nor the author here would be able to give an even remotely well-founded assessment of the technical IT prospects in either direction in terms of success or failure.

What is, however, noteworthy and can serve in two ways in judging AI and the reviewed facts is the output of the current versions of efficient language models, such as ChatGPT and company. More or less along the lines of, just ask AI. And this is just what the afore-mentioned article is addressing. The artificial intelligence Grok from Elon Musk’s company xAI, which is rumoured to be quite close to US President Trump, considers it “very likely” that President Trump is a Russian agent.

The AI embedded in X (formerly Twitter), which according to Elon Musk is “maximally truth-seeking”, is even more precise and estimates that it is even 75 to 85 per cent probable that Trump is an agent influenced by Putin. Even the reasons which speak for this are detailed, for example, early business contacts with Russia or that Trump has hardly ever publicly criticised the Russian president. In contrast, the FAZ column writes, ChatGPT is virtually reserved. This sees Trump to only 60 to 70 per cent as a Russian agent and would also stress the speculative nature of the assessment.