Four Questions for Christian Jessen, Head of int. Key Accounts at CRONIMET

"Four Questions For" is a new interview series by Metalshub. We interview commodity experts with questions that go below the surface.

What is your professional background, when did you first get in contact with nickel?

During my master thesis, which I wrote in 2008 in cooperation with ThyssenKrupp Nirosta, I first got in touch scientifically with the nickel market. My thesis investigated the drivers of stainless steel price volatility – nickel has a significant influence on it.

After my master thesis, I started in the raw material purchasing department of ThyssenKrupp Nirosta and looked after the buying of stainless steel scrap, ferrochrome, primary molybdenum, and other bulk ferroalloys. And of course, nickel in the form of ferronickel and nickel metal for the three European stainless steel plants of ThyssenKrupp.

Christian, what does do and what are your main responsibilities?

The family led CRONIMET Group is a worldwide specialist for stainless steel scrap, ferroalloys and primary metals. We combine many years of experience and expert knowledge with reliability, competence and congenial partnership.

Today, CRONIMET is established on four continents and has 59 subsidiaries, partnerships and representative offices. Our company with its 5,500 employees is a world leader in the field of stainless steel raw materials and recycling.

The success of our company rests on four pillars: sales, recycling, production and services, which provide a comprehensive basis for a solid product range. This ranges from pure metals and ferroalloys from primary raw materials through reprocessed stainless steel and metal scrap up to special and superalloys.

After various roles within the CRONIMET group, since 2004 I have been looking together with my team after our important suppliers as Head of international Key Accounts. We take care of the procurement of various primary and secondary nickel products, which we buy directly from the global nickel producers for the CRONIMET group.

What tips would you give purchasers who buy nickel?

Purchasing nickel is not rocket science. But there are a few things to watch out for which can make it easier and ultimately also cheaper to buy nickel units.

For example, especially small volumes should be bought in multiples of 6 tons (6 mt, 12 mt, 18 mt etc.) because on the London Metal Exchange (LME) only 6 ton lots can be traded and almost every nickel seller uses the LME to hedge its nickel price risk. When purchasing volumes which differ from 6 ton multiples, the seller will add a risk premium to the price because the price risk cannot be hedged out perfectly. This increases the selling price.

Moreover, purchases which are concluded on a fixed price basis are generally more expensive than purchases which are concluded based on an official LME price of a predetermined day or average plus a respective premium. Again the reason is the LME. If a seller offers nickel at a fixed price, he will check the LME price, add a premium and potentially other costs and quotes a price. At this moment in time the seller cannot yet hedge this transaction and lock in the sales price because he does not know yet whether the deal is actually concluded. He will wait until the transaction gets confirmed and then conduct a hedging transaction on the LME. In the meantime, while the purchasing manager is considering to buy or not, the LME price may have already changed significantly. The seller will also price in this risk, even if the validity of his fixed price offer was only 3 minutes.

Why has CRONIMET joined Metalshub and which benefits do you expect?

CRONIMET actually focuses on full truck loads or even larger volumes and therefore has a lean sales team. In Europe alone, there are countless small and medium size foundries and other nickel consumers of which, despite of our very good network, we only know a fraction.

Therefore, Metalshub offers us on the one hand the advantage to easily and quickly reach potential customers without having to send a large number of sales managers throughout Europe for ultimately winning, let’s say, five new customers.

On the other hand, Metalshub makes it easier to conclude transactions. All necessary information can be seen at a glance, clarifications via mail or telephone are no longer required, all buyers and sellers have been checked beforehand and services such as logistics, credit insurance etc. are offered. Thus, trading becomes faster and requires less internal resources which opens with the existing capacities a new sales channel for CRONIMET, especially for smaller quantities.