Germany

The forecast for Europe’s largest economy for 2021 is lower than at the beginning of this year as supply chain disruptions and a scarcity of chips and other intermediate goods are slowing the recovery. Accordingly, exports have also lost momentum and are stagnating. Once the production backlog clears around the end of this year, industrial activity should take off again in 2022 as order books are full.

The latest elections in Germany delivered a victory for Finance Minister Olaf Scholz’s Social Democrats. The next coalition government will inherit a still-fragile recovery from Chancellor Angela Merkel, who is stepping down after 16 years in power. The new government is expected to push more in the direction of a green economy.

European secondary prices have been rising for a number of weeks. Smelters are facing three main problems: rising energy costs; rising prices for magnesium and silicon; and constantly rising stocks with higher financing costs as a result of semiconductor problems. Industrial production is currently shrinking owing to supply bottlenecks for important intermediate goods such as magnesium. Looking ahead, however, 2022 looks much more positive and so there is no reason to be too pessimistic.

Copper’s tightness is leading to narrower discounts. Smelters are trying to achieve higher premiums on the sales side to compensate for the above-mentioned additional costs. With only a few weeks left in 2021, this copper scrap tightness may well persist over the winter time.