A brighter backdrop ahead for industrial metals

June was another good month for industrial metals. The prices of base metals made further gains, although those used in steel alloys (e.g. zinc and nickel) performed less well as wet weather in Southern China disrupted construction projects, leading to a temporary decline in steel demand. Nevertheless, we have become more positive on the outlook for industrial metals prices, owing primarily to our more upbeat forecasts for economic growth in China. By contrast, we think that the investment-led rallies in the prices of most precious metals look increasingly stretched, which is why we retain our forecast that precious metals prices will generally end the year lower.