LME nickel firms up more. Commodity analysts slowly widen their horizon beyond Covid-19 once more. The medium range forecasts continue to be influenced by electro mobility.


Scrap availability below pre-crisis levels with respectable demand. Corona remains an ongoing pandemic whose dynamic development and consequences are difficult to grasp.


Confronted with scandals the media focuses on individuals or institutions. Seldom is there only one “guilty party”. An overview of recent and older observations. Media criticism versus criticism of the media.


ISSF: Nickel smelting production in the 1st quarter down by 5.8%. Ferrochrome benchmark price late, but unchanged in the 3rd quarter 2020. LME tries to increase transparency of warehouse stock reporting.

Nickel robust with increasing volatility
The increase in LME nickel prices has continued in recent weeks. A new high of just over USD 13,700/mt was reached mid July. In June prices were still below USD 13,000/mt. However, this should not hide the fact that volatility has recently increased again, for example, because of the heightened tensions between the USA and China. The trading days of the 17th and 22nd July clearly ended in the red, almost reaching USD 13,000/mt once more, to then fully compensate for those losses on the 21st and 23rd July. At the time of going to press, the 3 month nickel future was trading at around USD 13,500/mt.

In relevant reports of commodity analysts, they are more involved again with the fundamental aspects for individual base metals. So it is not surprising that in the case of nickel the topic of electro mobility comes back into focus as this is likely to significantly influence demand in the coming years. The demand for batteries and the prospect of an economic recovery are reflected in the medium-term forecasts of analysts. The average expectation of 42 analysts polled by Reuters is for growth in China in 2020 to actually be 2.2%. At the same time, Commerzbank expects an average nickel price for the 1st quarter of 2021 to be USD 16,000/mt, for the year as a whole even USD 17,100/mt. But even for 2020, a forecast of USD 13,300/mt, in such an economic environment, is still robust, which is also confirmed in the actual price development, by the way.

Lockdown measures direct economic development
The general economic development world-wide is still mainly influenced by the consequences of the lock-down measures introduced by states (and partly already lifted) to try to contain the pandemic. Despite massive support packages of governments and central banks, it is still not clear just how long the crisis will continue. It cannot be excluded in such a dynamic development that there will be a renewed increase in infections at the start of the cold season. And this is currently the measure by which the competent authorities will react.

Therefore, in practice, there is likely to be some confusion, as, depending on how things run, Covid-19 and influenza types of illnesses sometimes show similar symptoms. Without reliable quick tests, it will not always be clear which illness the patient has. Against a background of increasingly visible and considerable economic collateral damage of the protective measures, it would seem to be impossible to send all patients suffering with cold and flu-like symptoms with all their contact persons into collective quarantine.

The steel and stainless steel industry has, of course, also been affected by the pandemic, even if first signs of recovery are being seen in Asia. The question remains whether there will be a normalisation to the same extent and timeframe in Europe, the USA and elsewhere. Availability of stainless steel scrap remains modest, and although recently there has been a slightly better trend, demand is still at a high level. Despite the usually weaker summer months, demand remains robust. Overall, however, volumes are still below pre-crisis levels.

Vulgar behaviour is increasing
In the author’s perception, communication is becoming increasingly vulgar, not only in social forums of the internet, but also in the media where reporting is now not just about presenting facts, but more and more about expressing implicit and blatant opinions. As a result, there are often significant emotions which of course (should) be passed on to the reader. And so people in public life especially are attacked as if to make an example of them.

This does not mean that justified criticism has to be weak, on the contrary. Criticism can also be expressed with hard language and clear words, whilst, however, respect for the counterpart must still be recognisable. In other words, arguments should and must be made respectfully. A striking example is the entrepreneur Tönnies, who is certainly not one of the most likeable of persons at first sight due to his manner and appearance.

He has immediately, almost by the entire media, come to represent and be responsible for all things wrong in animal welfare and abattoirs. Even if there is probably some criticisms to be made about the company Tönnies, the root of the problem is not necessarily there, but actually with the consumers, voters and politicians. For it would appear that a majority, who are now crying loudly about the situation, want one thing above all: hygienic and cheap meat. And for this, slaughterhouses like Tönnies and others are needed.

If consumers really had the serious will to do something about animal welfare and meat quality, then the proportion of organic meat as an alternative in Germany would not be 1.4 percent for pork, 1.8 percent for poultry and for beef a meagre 4.4 percent. And this, despite the fact that there was mad cow disease (BSE) in 2000, as some will remember, and at that time the German government promised an “agricultural revolution”.

Therefore, in the media and with the public it is above all just about one thing: every scandal needs a scapegoat. Just to name one more example, when the Love Parade catastrophe happened in Duisburg ten years ago, a culprit was quickly sought, and soon identified in the person of Mayor Sauerland. The agitation and stigmatisation of the media culminated in the fact that the then State Minister Kraft did not want to shake hands with Mr. Sauerland in front of the camera.

Also Wirecard is such a case. Now it is the fault of the auditors. Although the media, banking partners and investors should all have taken a closer look, as the Financial Times journalist did who stood alone with his views. Everyone apparently had less faith in him than in Wirecard, and its “serious” management and business model. Everyone wanted to bask in the glory of German digitalisation, but was, unfortunately, deliberately blinded by the falsified facts.

Especially in these already charged and agitated times now, a more balanced and fact based calmness would be wished for in the media. Unfortunately, the opposite is the case. All too often more oil is poured onto the fire. And the media should and must criticise, but this must be done with respect. No journalist would lose their standing and self-respect by this.

Covid-19 in first quarter in Asia already evident
The International Stainless Steel Forum (ISSF) has released stainless steel production figures for the first three months of 2020. Because of the Covid-19 pandemic, which started in China at the latest at the beginning of the year, not only affecting public and private life enormously, but also economies, a significant downturn was expected. And this has been reflected in official figures. World-wide in the 1st quarter 2020 stainless steel production declined to 11.7 million tons, a decrease of 5.8% compared to the previous quarter and 8.0% compared to the 1st quarter of 2019. In the comparison it should be noted that the 1st quarter 2019 was a generally very strong quarter globally.

The details show that the early influence of Covid-19 in China and Asia was considerable. In China, production declined most significantly compared to the 4th quarter by 12%, and also in the rest of Asia (without China and South Korea), the decline was still at 6.8%. In Europe, almost surprisingly, production increased by 13.1% from 1.572 million tons in the 4th quarter to 1.779 million tons in the 1st quarter of 2020. The anti-dumping and safeguard measures taken by the European Union against stainless steel imports from China, Taiwan and Indonesia certainly played a role here.
An increase of 9.1% was seen in the USA, albeit with lower absolute figures from 574 thousand tons to 627 thousand tons. For the second quarter, due to the pandemic increasingly spreading through Europe and to North and South America, a different picture is expected. While the decline in China and Asia should weaken or stabilise, or even be revised, Europe and the USA, unlike that of the 1st quarter, can expect slumps.

Ferrochrome benchmark price unchanged for the 3rd quarter
As already in the 2nd quarter of 2020, the negotiating parties for the European ferrochrome benchmark could not agree on the reference price for the 3rd quarter of 2020 on time. However, on this occasion they only needed a few days longer and on the 6th July a so-called rollover was announced. For the reference of the 2nd quarter those interested still had to wait 22 days after the start of the quarter for a price to be fixed. Rollover means that the price remained unchanged at USD 1.14 per lb from the previous quarter. From the 1st to the 2nd quarter there had already been an increase of about 12.9%.

With this result, it can only be assumed that ultimately the Covid-19 related influences on both supply and demand have balanced each other out. The supply of chrome ores and refined chrome products in South Africa was significantly affected by the lockdowns and other measures. On the other hand, there was also an impact in Europe on production activity and demand of stainless steel producers which would have presumably justified a price reduction.

In this respect, it is once again apparent, as already discussed here, that the Corona related decreases in volume (referring here also to the production statistic of the ISSF) do not only affect stainless steel production, but also its counterpart on the commodity side – whether this be primary raw materials or scrap – which is why chrome producers rejected calls for a price reduction.

(LME) warehouse stocks should be more transparent
According to official details on the LME website (https://www.lme.com/en-GB/Trading/Warehousing/LME-warehouse-network#tabIndex=0) there are currently over 550 warehouses accredited by the LME. LME contracts can be settled with physical stocks which are held in these LME approved warehouses. But since most participants use the LME to hedge against unwanted price fluctuations or to speculate as investors, less than 1% of futures lead to an actual delivery of metal. The vast majority of LME contracts are “closed out” before settlement. However, the small amount of physical deliveries does play a decisive role in creating price convergence.

Therefore the LME regularly publishes the stocks held in each warehouse. Essentially the stocks give an idea of commodity demand and supply. Lower warehouse stocks generally lead to more volatile prices and increase the risk of a “stock out”. In the past there have been controversial discussions about the extent to which the LME warehouse stock level is representative for the total inventory of a metal, since there are also other stocks held as well as those in the LME warehouses.

For example, in the second half of 2019, large amounts of nickel stocks were removed from the LME warehouses and stored elsewhere. With this measure a shortage of nickel was suggested and the price was presumably pushed higher. The Bloomberg news agency recently reported that the LME will now, therefore, in order to increase transparency, start to also publish private holdings from the most important ports. All metals relevant for the LME will be included. This will also be interesting for aluminium since larger warehouse stocks are often the result of recessions when producers cannot slow down production fast enough.

LME (London Metal Exchange)

LME Official Close (3 month)
 July 24, 2020
  Nickel (Ni) Copper (Cu) Aluminium (Al)  
Official Close
3 Mon.Ask
LME stocks in mt
  June 15, 2020 July 24, 2020 Delta in mt Delta in %
Nickel (Ni) 232,878 234,636 + 1,758 + 0.76
Copper (Cu) 247,000 141,725 – 105,275 – 42.62
Aluminium (Al) 1,577,000 1,649,275 + 72,275 + 4.58

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