Market Intelligence Report - June 2022

After difficult months in the first trimester of the year, overall market stability has started to increase. Signs of relaxation can be seen in many markets and industries, ranging from material prices to freight rates. Many logistics and transportation companies have reacted to the war in Ukraine, setting up new routes that bypass Russia. The Covid-related lockdown in Shanghai, China, though still ongoing, is likely to end at the beginning of June, providing hope for a normalization of global supply chains. On the other hand, energy prices in Europe are still high and show no signs of recovery to pre-war levels, but continue to drive inflation rates.

Market Insights

Materials

Material prices have retreated for the second month in a row and are on the way back to pre-Ukraine war levels.

Aluminum prices in May have decreased by 6%. The price of Nickel decreased by 10% in May while steel prices even decreased by 20% to 920€/t for EU-hot rolled coil. Aluminum, Nickel and steel all reached price levels last seen in January 2022 (as of CW22). 

The speculative rise in nickel prices that started at the end of February finally collapsed. Against the backdrop of weak demand in China and negative market expectations in Europe, the metal became cheaper in May. The average premium to the exchange price of nickel briquettes on Metals Hub has almost halved. Nevertheless, the premium remains at least twice as high as at the beginning of the year.

The good news is that most base metals have seen their price peaks in March, but have started decreasing again despite the ongoing uncertainty in the markets. Many base metals have already returned to their pre-war price levels, reducing the price pressure on materials.


Ferroalloys

The rapid appreciation of many ferroalloys in March and April, triggered by fears of shortages due to discontinued supplies from Ukraine and Russia, appears to have exhausted itself by May. In some segments, there has been an increase in supply from alternative regions, but in most markets, consumers have been extremely inactive, so by and large the ferroalloy markets have entered the traditional summer lull a month earlier than usual. 

Manganese ferroalloys and ferrosilicon prices dropped by 25-30%, ferrovanadium by 10%. Ferromolybdenum prices were largely unchanged, with the Metals Hub index recording only slight downward deviations from April levels. 

Meanwhile, low-carbon ferrochrome prices continued to rise in Europe amid stable consumption and limited alloy supplies from Russia due to imposed sanctions. In other regions the shortage is not so strong (US) or the market is even oversupplied (Asia), so the price trend there was rather downward. More data on transaction based price indices and live market insights can be accessed by subscribing to Metalshub price indices.


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