Whilst in world politics everything is topsy-turvy at the moment (Brexit, Trump, Turkey, elections in the Netherlands and France, etc.) a certain calm, if not to say normality, has returned to the world of commodities. Apparently, economics have turned away from political uncertainties and are concentrating more on actual business at hand. This is the only way that the solid economic data from all over the world can be interpreted. Even speculative influence in the commodity markets can only be described as being relatively moderate at the moment. The policy of (just about still) cheap money is possibly contributing to a formation of bubbles in some markets (stocks, real estate, art, vintage cars), but not in the commodity markets. Presumably, too many inexperienced investors have earned themselves a bloody nose in the past few years, so that these markets are now being treated with the respect which they justly deserve.
The American Federal Reserve Bank has already initiated a change of direction in interest rates and has actually just now implemented a further moderate interest rate rise of 0.25%. Good economic figures in the USA have supported this decision. In February of this year, the ISM Manufacturing Index rose from 56 points to 57.7, which gives an indication of recuperating dynamics in industrial activity. This may spoil the way to quick money for many opportunists, but it can only be greeted by global economists, for permanent low, zero, or negative interest rates endanger a correct allocation of financial resources and create problematic turbulences in certain markets. But at the moment just not in commodity markets!
The European Central Bank is still just toying with the idea of interest rate increases, but at some point or other this must be the consequence in view of rising inflation. The American Chair of the Federal Reserve Bank, Janet Yellen, has, above all, one major advantage, and that is her age, being a youthful 70 years old. She really does not have to think about her future professional career and can, therefore, work more independently of politics, which is actually fitting to the responsibility of the position she holds. And this is while serving under such a man as President Trump, which probably rankles him massively, as the lady is also certainly not keen to help him to an unjust triumph. And it is just with such independent people that the new American President seems to have the most problems, even though the American Constitution does, with good reason, stipulate a power sharing of democratic fundamentals, such as the courts.
Amidst all of this, in the last four weeks nickel prices have been moving within a stabile range of USD 10,000.00/mt on the downside up to USD 11,000.00/mt on the upside. At the moment, the metal is quoted at USD 10,250.00/mt on the London Metal Exchange (LME). The moderate and therefore healthy upwards trend remains intact. There is also little room left for a fantasy of unexpected price fireworks, however prices are well supported on the downside. It would seem, by all accounts, that stainless steel production is healthy. Demand is doing well too, without, however, becoming euphoric. At the other end of the scale, events in Indonesia and the Philippines, two core producers of primary nickel, or preliminary nickel products, are keeping supply numbers at appropriate levels.
Meanwhile, the future of the Philippine Environment and Natural Resources Secretary, Regina Lopez, is uncertain. She, as an environmental activist, has been the driving force behind the numerous mine closures, so coming up against the whole of the mining sector. The President has called for her nomination to be the Environment Minister, but Parliament has still to confirm or reject this appointment. Of course, the strong mining lobby would much prefer the position to be held by someone more moderate. The decision of Parliament has been put back to the end of May, seeing as the members are now in a six week recess. Happy holidays!
The International Stainless Steel Forum (ISSF) has just, quite aptly, published the provisional figures of the development of stainless steel production during the course of 2016. On the whole, tonnage worldwide saw an above average growth of 10.2% bringing it markedly up to 44.9 million tons, after a zero growth rate in the weak commodity year of 2015. In all important regions, production rose, only in the secondary markets of central and eastern Europe was less produced than in the previous year, 4.6% less bringing the amount to 247 thousand tons. In Europe / South Africa, a growth of 2.4% was seen, reaching 7.7 million tons. North and South America produced a total of 2.931 million tons of stainless steel. Asia, with 75.8%, is the absolute leader, whereby production in China grew with an incredible 15.7%, in the rest of Asia a plus of 4.8% was at least “just” recorded.
The European reference price for ferrochrome, which had risen in the 1st quarter by a clear 50%, or 55 US cents, to USD 1.65 per lb chrome, is expected to be significantly more moderate in the 2nd quarter after the exceptionally strong increase. In this regard for example, the indicators of Metal Bulletin were expecting a price of USD 1.48 per lb. The South African chrome producer, Merafe, has now made the results of negotiations for the 2nd quarter public. This is USD 1.54 per lb chrome, a reduction of 11 cents, or 6.7% less than the reference price in the 1st quarter. Such a solid result supports the argument for a generally good stainless steel economy.
At the moment, just what is being said by some public officials in Turkey (or whether they are high dignitaries will not be questioned just now), is at times quite astonishing. In the run-up to the referendum for a change in constitution effecting the (de facto already existing) presidential system in Turkey, which will take place on the 16th April 2017, a lot of heated disputes have taken place with Turkey about the political appearances of Turkish politicians in several European countries. Following is an example, without comment, about how senseless the arguments are, along with the insults and provocations, so that the ringleaders must hardly believe themselves just what they are saying.
In an interview with the German World Service (DLF), the AKP delegate, Mustafa Yeneroglu, who is simultaneously chair of the human rights committee of the Turkish Parliament, in answer to a question from the editor regarding the independence of the courts, which had decided on the detention of the German-Turkish journalist, Yücel, replied with the following:
“At least as independent as the courts in Germany, yes. If we at all want to make the visit of state leaders dependent on the number of citizens of the respective country being imprisoned in prison, then probably no German nationals are likely to enter Turkey, because it is certain that many more Turkish citizens are imprisoned in Germany as Germans in Turkey.” The full interview can be found and amazed at on the website of the German World Service (Deutschlandfunk).
Yet it still has to be said that this does not represent the opinion of the whole of Turkey, just a part of the society, which at the same time contributes to the conflicting problems in Turkey, as it can hardly be said that a political centre group exists which could mediate and urge towards compromise. People are either die-hard Erdogan supporters or Erdogan opponents. Another aspect is also perhaps interesting. Erdogan, who, in his role of bully, is trying to get the voters in his camp behind the referendum, and may appear to make the most noise because Turkey has one of the biggest armies, which has been equipped with the most modern weapons by the West. With this knowledge, even if it is only a perception, it is easier to make a lot of noise. In the EU the number of troops has been continually reduced over the last decades.
In the present difficult situation it cannot be completely excluded that Erdogan, after the referendum, will not make a complete turnaround in his policies and rhetoric as he so often does, especially if this would better suit his own power interests (compare this to Putin and Russia). It can hardly be believed that the Turkish economy would be willing to permanently forego western tourism, investments and trade with western businesses, which would be the case if it was to place itself too much on the outside.
Towards the end of the last year, the German Federal Association of Recycling and Disposal Companies (BDSV) gave a presentation of a scientific study with the concise short title “The Future of Steel Scrap”. This was prepared by the Fraunhofer Institute UMSICHT on behalf of the BDSV. It is the first comprehensive scientific study about the role of steel recycling. It deals in detail with the technical, economical, ecological and social factors of steel and stainless steel scrap. The website of BDSV (www.bdsv.org) has a brochure showing a summary as well as the full report of the study of the Fraunhofer Institute. The results have led to the deduction of seven scientifically proven core statements which have also been confirmed in expert interviews: no steel scrap – no steel industry, steel recycling is part of the value chain, no steel recycling – no circular economy, steel scrap preserves the environment and resources, steel recycling ensures and creates jobs on all qualifying levels, steel recycling makes sense for the economy and also the steel recycling branch has the potential for innovation. The reading matter can only be expressly recommended.
LME (London Metal Exchange)
|LME Official Close (3 month)|
|March 20, 2017|
|Nickel (Ni)||Copper (Cu)||Aluminium (Al)|
|LME stocks in mt|
|February 13, 2017||March 20, 2017||Delta in mt||Delta in %|
|Nickel (Ni)||383.040||382.824||– 216||– 0,06%|
|Copper (Cu)||247.825||332.975||+ 85.100||+ 34,36%|
|Aluminium (Al)||2.225.850||1.985.875||– 239.975||– 10,78%|