Growing difficulties accessing credit financing are exacerbating concerns about metal supply shortages in Europe, hampering the import of material needed to fully replenish inventories and lending further support to regional prices.
Smaller trading firms and mills in particular are struggling to access commodity trade financing or credit financing, which have long underpinned European metal trade and facilitated imports. Conditions have been worsening for some time amid prolonged shipping delays and extreme price volatility for certain products, to the point that it is now a major concern for some market participants.
'It is tough and this is an issue,' a European manganese trader said. 'You run your business and you are used to doing something and now you need five times the financing. Banks take months to process this and by the time they do, prices move even more.'
This year's price volatility has posed a significant challenge and resulted in the financing of a given volume of metal costing more. Most credit providers use a limit when it comes to financing and so those limits are now being reached much faster.
Manganese flake has been one of the most volatile products this year owing to production cuts and surging shipping costs, opening 2021 at $2,100-2,150/t fob China but since rising by 116pc to reach $4,500-4,700/t fob today, meaning 1,000t that would have been valued at $2.1mn on 4 January is now valued $4.6mn before factoring costs for transportation, warehouse...
Read Full Story: https://www.marketscreener.com/news/latest/Credit-financing-woes-building-for-EU-metals-sector--36445646/
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