Casper Burgering, senior commodity economist at ABN AMRO, points out that industrial metals markets have struggled so far this year but in the first quarter, sentiment in most base metals markets was still in full swing.
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“Optimism about a trade deal between the US and China prevailed. The mood shifted at the start of the second quarter when trade negotiations between the US and China stalled. Economic activity in the US, China and Europe decreased as tensions increased. Prices fell.”
“The so-called LME index – which reflects the weighted trend in the prices of aluminium, copper, tin, nickel, lead and zinc – has risen on balance by just 1% this year. The price trend in the different base metals is almost identical, but there are differences per metal. While the aluminium price lost almost 6% until 2 July 2019, the price of nickel in particular has risen sharply this year by more than 13%. The zinc price recorded a modest increase of a meagre 1%, while the copper price is now down by almost 2% compared with 1 January.”
“Since the introduction of Trump’s import tariffs, steel prices have been under pressure. The import barriers created by the US President had a disruptive effect on the global steel trade flows. The sector is facing abundant supply, weak demand, higher purchasing costs and persistently low steel prices. These are challenging circumstances.”
“A combination of factors will become price-determining in industrial metals markets in the coming months. The most relevant are the trade war, the monetary policy of the central banks in the US (Fed), eurozone (ECB) and China (PBoC), the direction of the dollar and economic activity in many countries.”
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