5 August 2022 – A new big stainless steel group in Europe? In Italian hands? It could come down to that, following the chain of events of the last few months. What started with the sale of Acciai Speciali Terni, could have been just another step towards a new European giant with the purchase of the stainless steel long products division of Outokumpu by Marcegaglia, which would not have to hide internationally either. Nickel prices in Asia and Europe are rising again – is this concern about the planned Indonesian export tax on nickel? And in China 200,000 tonnes of copper have disappeared.

Nickel futures in Asia rose again today, gaining up to 3.6%. And also on the LME it went up significantly at the start of trading. In the first peak by more than 5%.

For some days now, the media have been suggesting that Indonesia could introduce a new nickel export tax in the second half of 2022, probably even in the third quarter. This tax is intended to close loopholes that currently remain open in the actual export ban on Indonesian nickel.

The Indonesian government also seems to be concerned that the limited nickel reserves could be processed too quickly into cheap intermediate products – especially nickel pig iron – and prematurely deprive the nascent EV and battery industry of raw material.

The nickel tax may even be linked to the international nickel price and assessed on a percentage basis. A logical step, since high-quality nickel ores are a finite raw material in the long run and prices are likely to rise significantly in the medium term.

For Chinese stainless steel producers, this could mean an end to cheap raw material NPI, which industry circles believe will be the main target of Indonesia’s possible new nickel export tax.

The sale of the long products division of the Finnish stainless steel producer Outokumpu to the Italian company Marcegaglia has made some industry insiders sit up and take notice. Besides several rolling mills for stainless steel long products, the deal also includes an Electric Arc Furnace (EAF) with an estimated annual capacity of about 250,000 metric tonnes of stainless steel. This capacity should even be expandable to 400,000 MT.

This EAF can apparently, and this worries some market participants, produce stainless steel slabs. Slabs that could be rolled into hot-rolled coil in a hot rolling mill. However, the Marcegaglia Group does not yet have such a plant.

But if we now look at the current developments in 2021 and the first half of 2022, things get more interesting. The Arvedi Group, actually known for its stainless steel pipes, buys the Italian re-roller Acciai Speciali Terni (AST) from ThyssenKrupp and subsequently announces its intention to invest more than one billion euros in AST. Among other things, in a slab heating furnace with hydrogen-methane combustion and a pickling, rolling and annealing plant for stainless steel.

According to rumours, AST is one of the European companies that have recently initiated an anti-circumvention case against imports of hot-rolled stainless steel (SSHR) from Indonesia via Turkey. Someone in Italy wants to protect their investments when they are already expanding their rolling capacities for SSHR.

And they can also come up with a possible new major customer, the Marcegaglia Group. But Marcegaglia stupidly does not have its own hot rolling mill for its slabs from the former Outokumpu EAF to make flat-rolled stainless steel in its own rolling mill.

Now not only AST would benefit from better utilisation of its own new and ultra-modern rolling facilities right from the start, but also the Arvedi Group, which can obtain SSHR from Marcegaglia’s slabs via the new subsidiary AST in order to make pipes from them.

In addition, Marcegaglia can save the investment in its own hot rolling mill and better utilise its EX-OTK EAF and get the SSHR they need to make cold-rolled stainless steel (SSCR), for example.

Yes, of course, the production of stainless steel in EAFs based on scrap is rather of insufficient quality to make flat products out of it. But you know what? The European Union is currently giving away tax billions in subsidies to get its own steel producers green, at least in appearance.

And such an old EAF from Outokumpu certainly needs to be overhauled and expanded to 400,000 MT per year with the most modern means. The numerous EU subsidies will certainly make this a cost-effective option – especially at the moment.

Negotiations between two European stainless steel giants were quickly broken off a few months ago due to highly likely objections from EU competition regulators regarding a possible dominant position.

With a new European stainless steel group, which at its core consists of already established and traditional companies and is also firmly in Italian hands, the currently missing counterpart could be created, which is still lacking for the competition regulators. This is also a form of lobbying.

In any case, the three Italian stainless steel companies can now make themselves much more independent of the large European stainless steel producers.

Editor’s note: This scenario is a theoretical thought experiment based on the facts and findings available to us. We have only put individual parts in a logical order.

To the horror of a group of Chinese companies, the stocks of a copper sulphate warehouse in northern China have apparently been manipulated upwards by 200,000 tonnes. An inspection then revealed that the copper had probably never existed and that overselling had taken place. The total value of the damage is said to be about half a billion US dollars.

Another major case of commodity fraud had already caused a stir in China when aluminium worth about one billion US dollars disappeared this year.

It is important to remain attentive and to work with trustworthy partners.

We at the Gerber Group have been trading in stainless steel worldwide for over 20 years. We are your experts when it comes to purchasing, import, logistics and services. Information is a vital part of this. Because only then can you and we make the right decisions. Do you have any questions? Contact us now.

Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.

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