10 February 2023 – Commodity shortages and high scrap prices threaten structurally weaker countries more quickly. And can easily lead to domino effects that take entire industries with them when one commodity becomes scarce. New scam in nickel? Why you have to be careful with commodity deals.
Commodity shortages and high scrap prices
The shortage of raw materials and the high prices associated with it, especially for ferrous scrap, hit structurally weaker countries particularly hard. Currently, Pakistan and its steel producers are leading the way.
Steel crisis in Pakistan due to commodity shortages
Pakistani steel producers have already been suffering from a massive crisis for several months. The decline of the Pakistani currency, high prices for raw materials and scrap, and the lack of financing options, especially Letter of Credit (LC), are bringing the manufacturers to the brink of collapse. Calls for government-backed LC have been going around the Pakistani media for some time, but so far seem to be falling on deaf ears with the government.
Steel price in Pakistan at all-time high
The price of steel in Pakistan has now reached an all-time high and is already affecting other industries. This is yet another example of how, when a certain commodity is not sufficiently available, the structurally weaker countries in particular suffer first from the lack of these raw materials, and this can quickly lead to a domino effect in the local economies.
New nickel scam with damages of more than US$577mn?
Commodities, especially the valuable nickel, are repeatedly the target of fraudulent schemes. Now it seems to have hit Trafigura, a major commodity trader based in Singapore, where damages of more than half a billion US dollars may have been incurred.
Watch out when buying commodities
Not an isolated case, think back to the billion dollar scam involving nickel from 2021, for example. Or the cases where non-existent aluminium or copper was sold in China and the buyers ended up with empty warehouses. But even on a small scale, there are repeated cases of damage, such as a Turkish trader two years ago who received a container full of tyres instead of the promised stainless steel coils from China.
Watch out when buying raw materials. The cheapest price is not always the best offer. Otherwise you will quickly pay double and triple on top.
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.