New Year, old luck. The Christmas miracle, in the broadest sense, did not happen. The year changes, the challenges remain unchanged. Economies of the USA, China and Europe are crucial.

The showman and US President-elect Trump stays true to his colours: superlatives, issues, giving voters hope and perspective. A fascinator with maximum media coverage.

Reuters survey not ambitious regarding LME nickel prices for 2025. If it were not for the five surprising scenarios for the current year. Price risk could be on the upside.

No report without Indonesia. The role of the world’s biggest nickel ore producer makes this possible. Also the numerous and vague statements of government representatives. Their aim: the price must go high.

 

Not everything should be taken literally
Hardly really surprising that the year begins not much differently from where the old one left off. For the New Year is still young and therefore also not wise. The holidays could at least give a little respite from the numerous political and economic challenges, but the Christmas miracle unfortunately did not provide quick solutions. Events continue to be dominated by the economic situation, and above all, however, by the future outlook of the global economy. And in this connection, all eyes are once again looking to China, and of course, also the US where the big “deal maker” is preparing for his inauguration and daily making headlines and media reports.

Away from any content-related assessments, Donald Trump is doing a remarkably good job as far as PR and publicity about his person are concerned. However, nearly all media outlets throw themselves almost childlike onto every statement. The more ridiculous the better. It is really amazing how journalists can provide such a stage and a platform for one individual politician, even if he is the elected President of the United States. The attribute of the “evil one” seems to create a huge fascination, especially in European media. If he is really supposed to be the “devil”, then it might be better, in the broadest sense, to spray him with holy water in order to be rid of him, rather than continually handing him a microphone. On the other hand, there are hardly any noticeable reports about other politicians and their opinions, suggestions, successes, etcetera, due to his omnipresence. Those who are preferred to be in power are below the threshold of perception. But those who are not known are also not voted for. Whether it is about the annexation of Greenland or the control of the Panama Canal, then journalists believe they can and must show the public the madness and true face of Trump by continually repeating the reports about him. They are trying to turn support away from the politician and his party and comparable parties almost everywhere in the world.

However, the right approach would be to report more on the politicians who offer realistic solutions for the problems which, without any doubt, do exist. Hardly anything is heard here because of course, their statements do not create as much attention as those of the “show star” Donald Trump who can consistently push through his style. The lack of reporting about alternatives is, hopefully, not because these politicians do not even exist.

After all, the old guard and the elite have certainly not covered themselves with stardom, that they would have a real second chance with the public, in whatever combination and form. Only a policy change with a clearly defined outline, preferably supported by new reliable faces can counter populism. As far as this goes, the concern in Germany should not be about the upcoming election, but about the one following. We should be full of optimism and hope that politicians take the chance and fundamentally renew themselves.

It can only be wholeheartedly agreed with Marie-Agnes Strack-Zimmermann, Chair of the Defence Committee of the EU Parliament, when she says: “We should not be driven crazy by every statement from Trump”. This applies to the specific proportion of defence spending in percentage of economic output just as much as to Trump’s promise, in all seriousness, to end the war in the Ukraine within 24 hours of taking office. At the beginning of the second calendar week, from his Mar-a-Lago headquarters in Florida, he announced: “I hope to have six months. No, I hope long before six months.” He does certainly want to end the war, but Trump can no more override the laws of nature as he can the constraints of administrative structures and the duration of political processes, either domestically or internationally.

This is (for him) not what it’s all about. It is about provocation, attention, and showing and maintaining dominance in the topics important to him and his supporters (after all, this is half of US-American voters). But the economy and the capital and currency markets also hang on to every word said by this person. At one of his election campaign rallies he spoke of 20% tariffs, at the next of 50%, and then again 500%. It is not about specific numbers, it is about superlatives and the impact, as well as his statements that he is determined to make changes in the various sectors. Trump and his advisors know that tariffs of such magnitude would also be damaging to their own country.

Yet in recent weeks, speculation and rumours have been circulating in the markets about how high and on what tariffs could be imposed, and this has pushed the exchange rate for the dollar up or down, depending on the report, having a considerable impact on those commodities quoted in US-dollars, such as the industrial metals, aluminium, copper and nickel. The allocation and presumption of such personal ability being given to one individual, outside of the known dictatorships and regimes, shows a not too inconsiderable blindness and naivety, just as it traditionally was that when the President of the Federal Reserve, Alan Greenspan, only needed to cough for the dollar to move.

This author holds more with the quote from a former diplomat and astute expert of the Trump administration which is based on his own experience: “Take him serious, but not literally”. A little more sense of realism would certainly be useful and, in all seriousness, necessary in preparation for talks and negotiations with the US President, in order to take the considerable emotions and hectic pace out of discussions. Trump’s new term of office will also have to be measured against reality and, like the first Presidential term, will not come anywhere close to what his opponents fear, and what his supporters hope.

The recent US economic data is, however, encouraging and certainly not (yet?) thanks to the new President. Probably also not to the old one either. The labour market seems to be stable, with rising new job numbers and a falling unemployment rate. This does, however, reduce the amount of play the Federal Bank has to quickly make more interest rate cuts, which it has been recently indicating. This is because inflation rates are rising once more, not just in the USA but also in Europe.

Almost more important than this is the news that demand from China, as top metal consumer, although hit hard by the real estate crisis, certainly seems to be rising again, so that, for example, copper prices are at a 1 months high. Nickel on the London Metal Exchange (LME) has also been quoted firmer again at almost USD 15,800.00/mt, after prices were only just over the USD 15,000.00/mt level during the course of the last 30 days.

In November 2024 the news and economic data agency Reuters published its traditional autumn forecast with the expectations of base metal prices for the current year on the London Metal Exchange (LME). The nickel average price for 2025 is expected to be USD 17,283.90/mt (median: USD 17,288.00/mt). When the survey was taken on the 29th October 2024 (with almost two unknown months still) the average expected for 2024 was USD 17,255.00/mt. Now that the old year has ended, an average 3 months price for the year has been confirmed as USD 17,070.30/mt. This small comparison already shows how difficult it is to forecast commodity prices.

24 brokers and banks took part in the Reuters survey, and in the individual quarterly estimates there were 19 to 21 participants. Should the 1st quarter of 2025 start with an average just over USD 17,000.00/mt, then by the end of the 3rd quarter 2025, about USD 300.00/mt is added to this to show an average of USD 17,283.10/mt. This is not much and shows that expectations for an economic recovery are moderate. The forecasters really expect a continuance of a sideways movement. At this point it should be added that the forecast risk for 2025 is, however, on the upside. The individual estimates for the current year lie between USD 15,675.00/mt on the downside and USD 19,015.00/mt on the upside.

These price estimates probably also include the expectations in supply and demand towards the end of 2025, which Reuters also asked for in the survey. The consensus of those questioned expect a supply surplus of 151,000 tonnes primary nickel, whereby the lowest estimate shows an almost balanced market of 26,000 tonnes, and the highest shows a surplus of 376,000 tonnes. It shows there are big differences in opinion. Ultimately, the forecast just replaces uncertainty with failure. Therefore analysts take the view on the actual market development sportingly and eagerly wait for what the year will bring before once more taking part in the Reuters survey during the course of the year.

A short report about the trading activities on the London Metal Exchange (LME) is certainly not a side note here. As Reuters also stated on the 7th January 2025, the average daily volume of contracts traded on the LME in 2024 increased by 18% to 664,698 contracts. There was even an increase in LME nickel futures of 59% year on year. Nickel, therefore, reached the volumes last seen in 2021, before the massive market distortions of March 2022. It is very encouraging that confidence has obviously returned to the market again.

Five surprising scenarios for raw materials in 2025
As Clyde Russell, Asia Commodities and Energy columnist for Reuters, wrote in his year-end report on the 30th December 2024, 2025 could mark a changing point for the commodity markets. Geopolitical tensions, economic uncertainties and energy transition provide plenty of ammunition. Here are five scenarios which could cause surprises in the coming months:

1. Trump surprises positively
Who would have thought that? In this scenario Donald Trump manages to resolve trade conflicts by using clever tactics, without destabilising the global economic system. The USA flourishes, China returns to growth with massive economic measures, and the global upturn drives commodities such as copper. The resolution of conflicts in the Ukraine and the Middle East, as a peace dividend, additionally supports the growth orientated commodities. Only oil still presents problems: a surplus in output through increased US production would put pressure on the price.

2. Under Trump all goes wrong
But it can all happen very differently: Trump pursues his radical plans, withdraws from international treaties and imposes high trade tariffs. The global economy is thrown into turmoil, growth dependent commodities such as copper and iron ore lose in value. Also crude oil and LNG come under pressure, since demand collapses. The initial euphoria on Wall Street about tax cuts quickly gives way to disenchantment as the negative consequences of trade wars become apparent.

3. China makes a comeback
While many have already written China off, the country could celebrate a brilliant comeback in 2025. After settling the debt crises with real estate developers and local governments Beijing turns the focus back on consumption and international cooperation – above all with the Global South. This revives raw materials such as copper, iron ore, coal and LNG. However, oil could lose some importance due to the rapidly growing electric vehicle fleet in China.

4. Is OPEC+ breaking up?
The oil alliance OPEC+ has long been seen as a stabilising factor. Yet weak demand and US pressure to increase its own production could endanger the group’s cohesion. Countries such as the United Arab Emirates would be tempted to quickly turn their reserves into cash – in the fear that electromobility market under Chinese leadership revolutionises the global oil market.

5. Energy transition picks up pace – without the USA
China could become the driving force behind energy transition, in that it expands the export of electric vehicles, solar modules and batteries. While countries worldwide profit from cheaper technologies, the USA continues to isolate itself more through its “America First” policy. Winner of this transition are raw materials like copper, lithium and silver – the USA risks being left behind.

2025 could, therefore, according to the concluding remarks of Russell, go down in the history books as the year of upheaval. Perhaps this expectation is a little daring in regard to the history books. Yet it is actually the case that commodity markets, despite uncertainties, are always capable at adapting quickly to new realities. And this also answers a question asked in our last edition, of whether there is anything at all positive to report.

Indonesia’s nickel ore imports rise sharply in 2024
Reuters has reported that the delayed granting of mining quotas and heavy rainfalls have caused Indonesian smelters to import record amounts of nickel ore as production continues to rise. In the first 10 months of 2024, 9.3 million tonnes of ore was imported into this leading nickel producing country, corresponding to a total value of USD 406 million. In comparison: in 2023 just 161 thousand tonnes of ore were imported. An incredible increase.

The availability and the supply of Indonesian ore was an ongoing issue last year, since the mineral rich country has warned that its reserves are finite. For the next three years quotas of 240 million tonnes have initially been approved, but the approved quota for 2026 could fall by up to 27%, according to Steel News.

The Indonesian government has also been toying with the idea of redistributing nickel supply within the downstream nickel industries. Licence fees for ores with a nickel content of less than 1.5% which are intended for use in batteries, could be lowered, which could in turn lead to a redistribution of nickel supply away from stainless steel. This proposal goes hand in hand with the attempts of the government to attract higher value industries to the country.

It must, however, be said that at least as far as governmental information and reports made available in the English language are concerned, they are usually pretty vague in content, despite being relatively numerous. This can be because the regulations and quotas are dynamic and still being worked out or that from the point of view of government, it does not want its cards being out in the open so, for example, preventing circumvention.

Unfortunately this does not really increase the knowledge gained (see also the analysts’ estimates for primary nickel surpluses). The government’s objective is, nevertheless, very clear. The country’s nickel reserves should be valued as high as possible domestically. The Philippines, as a major exporter of unprocessed nickel ore, is obviously still at the start of realising this conviction.

 

LME (London Metal Exchange)

LME Official Close (3 month)
January 15, 2025
  Nickel (Ni) Copper (Cu) Aluminium (Al)  
Official Close
3 Mon. Ask
15,895.00
USD/mt
9,140.00
USD/mt
2,579.00
USD/mt
 
LME stocks in mt
  December 10, 2024 January 15 , 2025 Delta in mt Delta in %
Nickel (Ni) 165,810 167,814 + 2,004 + 1.21%
Copper (Cu) 268,100 260,750 – 7,350 – 2.74%
Aluminium (Al) 679,600 614,375 – 65,225 – 9.60%

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