Metals: Weak demand – ABN AMRO

Casper Burgering, senior commodity economist at ABN AMRO, suggests that the demand for metals is weak due to declining global economic activity with macroeconomics also heavily influencing price trends and determining sentiment in many markets.

Key Quotes

“A combination of cyclical factors will continue to drive the price for industrial metal markets in the coming months. Key drivers are the trade wars, global economic activity and the monetary policy of central banks.”

“Developments in trade conflicts between the US with China and the EU are crucial for investor sentiment. In the event of an escalation, uncertainty increases and investors are not eager to invest in cyclical metals.”

“The trade conflicts cause a stronger cooling of the Chinese economy and puts pressure on the economies of both the US and the EU. This has an adverse effect on the demand for industrial metals. To mitigate the economic downturn, central banks such as the Fed (US), the ECB (EU) and the PBoC (China) are pursuing stimulating economic policies. This global monetary easing cycle contributes to a stabilisation of economies. However, the downside risks remain high. They include a further escalation of trade conflicts and geopolitical challenges (Iran, Hong Kong, North Korea, South China Sea, Syria). A recession is still a very real possibility.”