Latest market news

Europe to keep using NPI until CBAM: Anglo American

  • : Metals
  • 24/10/04

Europe's stainless steel producers will continue to import and use nickel pig iron (NPI) until the EU's carbon border adjustment mechanism (CBAM) enters its definitive period in 2026, according to John Eastwood, major nickel mining group Anglo American's head of sales, stainless and specialty steel raw materials.

A region-wide scarcity of stainless steel scrap and rising raw material costs drove European mills to pivot to using the cheaper and more carbon-intensive Indonesian NPI this year, with imports equating to 10,000t of nickel metal content in January-July, according to Red Door Research managing director Jim Lennon. A European trading firm told Argus this week that Spanish producer Acerinox, ramping up production after a five-month strike-related outage this year, has also committed to using NPI as input feedstock.

Speaking on the sidelines of the Nickel Institute Seminar during LME Week on 2 October, Eastwood said this trend will not die down in the near term despite recent falls in scrap prices, with only CBAM — the EU's tax measure to limit carbon leakage within the region and support its long-term climate goals — being a likely deterrent. Currently in its trial phase before full planned implementation in 2026, CBAM requires European importers to offset the CO2 emissions linked with the production of the goods purchased overseas by buying emissions certificates.

Scrap suppliers in Europe are waiting as they realise they cannot compete with NPI, with the downside to prices likely to be limited as a result, Eastwood said. The Argus assessment for stainless steel scrap 304 (18-8) solids cif Rotterdam has fallen by nearly 20pc since 22 August and was last at an average €1,175/t.

The European stainless steel industry is facing a severe downturn with real demand set to shrink for a third straight year in 2025. Flat producers in particular are operating at well below capacity amid low downstream service centre demand, and Eastwood foresees no change to fundamentals until the second half of 2025.

"The problem is not profitability, the problem is there is excess capacity," Eastwood said. "We had Acerinox out of the market for months this year, but it made little difference to the market and prices. Despite a shortage of scrap, there was no impact on our ferro-nickel sales, which tells you how weak the market is."

Eastwood believes the second half of 2025 is when demand might recover as the effect of improving macros and easing monetary policy will start to kick in.

CBAM has come under intense criticism from European stainless steel producers given that it does not include scope 3 emissions while imposing taxes on selected upstream raw materials, with many producers simply viewing it as a protectionist measure that is fast-tracking de-industrialisation. Eastwood echoed this sentiment and stressed on reform, but said the industry had now accepted that it was here to stay.

"There are many holes [in CBAM]. It includes ferro-nickel but leaves out refined nickel, for example," he said. "It is not uniform for the whole supply chain. Average CBAM costs are about $1,000/t of nickel. It is not clear who will pay this."

Anglo American's projections peg the class 1 nickel market as the sole provider of market surpluses in the coming years, with the Asian class 2 market, including NPI and ferro-nickel, balanced and even tight, Eastwood said. Nickel prices on the LME are expected to move similarly in 2025 relative to this year.

"The wider surplus story is here to stay," Eastwood said. "The story about nickel rocketing up is over. We do not expect much change."

Eastwood noted freight costs as a significant limiting factor for the stainless steel industry next year, curbing imports of finished stainless steel into Europe.

"Freight prices have been astronomical, and we expect it to remain the same next year," he said. "These costs will weigh heavily on trading, whether imports or otherwise."


Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

24/11/01

Striking Boeing workers to vote on new proposal

Striking Boeing workers to vote on new proposal

Houston, 1 November (Argus) — Boeing workers next week will vote on a third labor proposal from the aerospace manufacturer that could end a seven-week work stoppage that has halted production of several commercial aircraft programs. More than 32,000 Boeing employees represented by the International Association of Machinists and Aerospace Workers (IAMAW) will cast their ballots on 4 November after union leadership and the company struck a tentative agreement on Thursday. The new offer comes with a 38pc general wage increase (GWI) spread over four years and a $12,000 ratification bonus — both up from 35pc and $7,000, respectively, from Boeing's previous proposal that workers rejected on 24 October. Sticking points during contract negotiations have centered around pay raises, with workers seeking a 40pc GWI, and the reinstatement of employees' pension plans. The latter is not addressed in the company's latest offer. Boeing's machinists have been on strike since 13 September, putting a squeeze on the company's finances with output of its flagship 737 MAX aircraft stalled. Production of Boeing's 767 and 777 models also has been disrupted. If the deal is approved, the earliest workers could return to their jobs would be 6 November, with everybody having to be back by 12 November at the latest, the union said. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US job growth slumps in October, jobless rate at 4.1pc


24/11/01
24/11/01

US job growth slumps in October, jobless rate at 4.1pc

Houston, 1 November (Argus) — The US added only 12,000 nonfarm jobs in October, reflecting the impacts of two hurricanes, a strike at aircraft manufacturer Boeing and a slowing trend in hiring prompted by high borrowing costs. The unemployment rate remained unchanged at 4.1pc, still close to a five-decade low of 3.4pc reached in early 2023, the Labor Department reported today. Last month's gains were far fewer than the 113,000 forecast by analysts surveyed by Trading Economics. Job gains for the prior two months were revised down by a combined 112,000 jobs, leaving September with a still robust 233,000 and August with 78,000 jobs. A Labor Department report earlier this week showed job openings in September were at their lowest since January 2021. Still, job gains for the 12 months through October averaged 194,000, a little higher than the 12-month period before Covid-19 struck the US beginning in early 2020, causing millions of job losses and a sharp but short recession. Today's employment report, the last before next week's US presidential election, cements odds of a quarter point cut in the Federal Reserve's target rate next week to nearly 100pc from about 96pc Thursday, according to CME's FedWatch tool. The Fed cut its rate by half a point in late September, the first cut since 2020, as it is just beginning to loosen monetary policy after the sharpest tightening in decades to battle surging price gains. Inflation has since moved close to its 2pc target and job gains have gradually slowed, even as the economy remains robust, growing by nearly 3pc in the second and third quarters of the year. Hurricane Helene made landfall in northern Florida in late September and slammed northwards into Georgia, the Carolinas and Virginia, leaving major damage in its wake. Hurricane Milton struck Florida on 9 October, within the period of both surveys used for the job report. About 32,000 unionized workers at Boeing have been on strike since early September. Job growth trended up in government and in health care and social services, which added 40,000 and 51,000, respectively, while manufacturing declined by 46,000, partly due to strikes. Construction added 8,000 jobs. Average hourly earnings edged up to an annual 4pc from 3.9pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

First northwest European HRC options trade on CME


24/10/31
24/10/31

First northwest European HRC options trade on CME

London, 31 October (Argus) — Options contracts settled against the Argus northwest European hot-rolled coil (HRC) index traded today for the first time since their launch on the CME Group exchange more than two years ago. An option on the northwest European HRC contract on CME (EHR) traded today at a premium of €20/t for the right to buy a strip for the first quarter of 2025 (50 lots or 1,000t of January, February and March) at €700/t. Options are a financial contract offering the right, but not the obligation, to buy or sell an underlying asset — in this case the EHR futures contract — for a specific price at a specific point in time. The right to buy is called a call option; the right to sell a put option. The buyer pays a premium to have this right, which is typically used to protect against an adverse market move. The Argus northwest European HRC index stood at €558.75/t on Wednesday, while the January-March futures contracts are currently trading at about €620/t, putting the call option above the current spot market price and forward curve for the contracts in question. Market participants suggested the trade could be part of a ‘short collar' strategy, in which someone who is ‘long' on the underlying futures contract (trading on anticipation of an upwards move) buys a put option (the right to sell at an agreed price) to protect their long position for a premium, but then sells a call option to receive a higher premium to offset the cost of the put. CME Group launched the EHR futures contract in March 2020. Since then more than 3.6mn t of steel futures have traded, with more than 1mn t this year alone. Open interest — a measure of liquidity measuring the volume of open contracts — currently stands at a record high of more than 230,000t. Options were added in May 2022. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Codelco Cu output recovers in 3Q


24/10/31
24/10/31

Codelco Cu output recovers in 3Q

London, 31 October (Argus) — Chilean state-owned Codelco's copper output fell on the year in January-September, but rose in the third quarter. January-September production fell by 5pc to 918,000t. Chief executive Ruben Alvarado attributed this to a fatal accident in March at the Radomiro Tomic unit that halted operations for over a month, as well as delayed start-up at the Rajo Inca unit. Despite declining ore levels at some key deposits, third-quarter copper production was up by 1.5pc on the year, at 338,000t. Adjusted January-September earnings before interest, tax, depreciation and amortisation increased by 21pc on the year to $4bn, reflecting higher copper prices. The company expects production from the Andes Norte expansion at its El Teniente unit to start in the first quarter of 2025, while the Andesita project should come on line in the next few months. Rajo Inca should be on stream before the year's end. By Roxana Lazar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Amag’s earnings up in 3Q but down in year so far


24/10/31
24/10/31

Amag’s earnings up in 3Q but down in year so far

London, 31 October (Argus) — Austrian aluminium producer Amag posted higher revenues and earnings on the year in the third quarter, but both fell in the first nine months of the year amid challenging market conditions. Amag's earnings before interest, taxes, depreciation and amortisation (Ebitda) rose by 8.3pc on the year to €52.2mn ($56.6mn) in the third quarter of this year, while Ebitda over the first nine months of the year fell 11.1pc to €147.6mn. Revenues climbed 7.1pc on the year to €370.9mn in July-September, on shipment volumes that rose by 2.4pc on the year to 109,100t. Revenues reached €1.079bn in the first nine months of this year, down 5.6pc from the previous year, and shipments fell 1.3pc to 323,300t over that period. "With the economic situation in many European countries remaining subdued, we have so far succeeded in generating solid earnings through product mix shifts and a high degree of flexibility," chief executive Dr Helmut Kaufmann said. "Nevertheless, the weak industrial economy in Europe is leading to increasing pressure on prices and volumes in numerous industries." Amag confirmed its Ebitda target for 2024 at €160-180mn. By Jethro Wookey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more