Germany

The economic forecast for Germany has been significantly downgraded, with major economic research institutes now predicting a contraction of 0.1% for this year. The main reasons are uncertainty among businesses and the public, exacerbated by high interest rates. This has slowed investments, with companies hesitating owing to the volatile economic and geopolitical environment, while private households are saving rather than spending on property or consumption.

Both the government and research institutes expect the economy to recover gradually next year, conditional on the success of the government’s growth initiatives such as tax reforms, labour incentives and reducing bureaucracy, although only a small proportion of these measures have been implemented to date.

The metal market in Germany has experienced significant volatility. Despite many brokers predicting price declines during the recent LME Week owing to the disconnect between prices and the real economy, prices have remained stable or high. The market still awaits lower interest rates to stimulate construction, which would increase what is currently very limited scrap metal availability. Anticipation of a more favourable investment climate has led to a wait-and-see approach across financial markets, industry and other economic sectors.

In the aluminium sector, official ingot prices have seen corrections in recent weeks, while the LME remains high. Reduced demand from the electric vehicle industry has also lowered consumption expectations. Availability remains tight in the copper market while official premiums for registered cathodes remain at the same level as last year. The market continues to experience a contango on the LME, indicating future prices are higher than spot prices.