[SMM Analysis] In June, imports of nickel sulphate from Indonesia, Finland rose, driving a sharp increase in net imports

The EU Commission's latest ETS reform proposal (COM(2026) 616), presented as a competitiveness measure, adds further layers of funds, investment conditions, and reporting obligations on top of already complex ETS and CBAM rules without meaningful simplification. Free allocation for CBAM sectors is extended to 2038, while historic certificate surpluses accumulated by the steel industry remain entirely untouched — allowing European producers to meet current obligations with previously free-allocated certificates while importers must provide upfront CBAM capital. SMEs appear in funding programs but receive no exemptions or reserved quotas. The case of Saarstahl illustrates the asymmetry: the company benefits simultaneously from historic ETS surpluses, extended free allocation, decarbonisation subsidies, CBAM border protection, and steel tariffs, with over half of its EUR 4.6 billion hydrogen investment publicly funded. Meanwhile, Germany's 2026 industrial electricity price of around 16.7 cents/kWh has returned to 2014 levels, undermining the steel industry's persistent claims that energy costs are the sector's primary burden.

Ukraine-based seamless stainless steel pipe producer Centravis will place its Uzhhorod facility into conservation mode from September 1, 2026, citing the EU's new steel import quota regime effective July 1, which sharply reduced tariff-free quotas and raised out-of-quota duties to 50%. The company expects the revised quota system to reduce its European sales by approximately 50%, making it economically unjustifiable to operate both its Nikopol and Uzhhorod production sites. Employees will remain on payroll during the conservation period, with the facility maintained for potential resumption. The Uzhhorod plant, commissioned in 2023 to diversify production risks away from the frontline city of Nikopol, currently employs around 130 people. Centravis plans to consolidate production at Nikopol despite ongoing security challenges in the region.

LME nickel futures gained 1.3% last week for a second consecutive weekly advance, though prices slipped below US$17,000 on Friday (July 17), closing at US$16,961/ton, down US$191 on the day. Spot prices fell US$185 to US$16,767/ton. The Friday downturn was driven by global equity market declines and Fed officials' comments on potential rate hikes amid AI-driven inflation concerns. Despite the late-week pullback, nickel remains up 4.18% for the month, with LME inventories declining 564 tons to 274,284 tons. Market participants attribute recent gains to strong expectations tied to pending Indonesian mining quota decisions and rising oil prices from Middle East tensions, though weak actual demand points to continued near-term price volatility.