Don’t rule out further price falls

February was another poor month for industrial metals. However, prices fell by less than in January and policy loosening seems to have stabilised prices more recently. That said, the outbreak of COVID-19 is quickly becoming a global issue, which suggests that the risks still lie to the downside. In our view, a large hit to industrial metals demand in China has already been priced in. But we think that a dent to growth outside of China is now inevitable, even if policymakers continue to raid the armoury to shore up the economy. Therefore, industrial metals prices could fall further in the near term.
Caroline Bain Chief Commodities Economist
Continue reading

More from Metals

Metals Chart Book

Strong month for metals not a sign of things to come

May was a strong month for the prices of most metals, but we suspect that this may be as good as it gets. After all, if we’re right in expecting economic growth in China to slow in the second half of this year, the prices of most industrial metals are likely to end the year lower. Meanwhile, the recent rise in the gold price has been far larger than is implied by the fall in real yields, and we think that the gold price will come under renewed downward pressure in the months ahead as real yields start to creep higher.

3 June 2021

Industrial Metals Update

Calling time on the rally in US steel prices

Limited domestic supply, expensive imports and strong growth in demand have fuelled the rally in US steel prices. But with supply set to improve, at a time of softer growth in demand, prices should fall.

26 May 2021

Industrial Metals Update

Fundamentals, not regulation, to drive iron ore lower

While China’s announcement that it will crack down on speculation and market irregularities has taken some of the froth out of the iron ore market in recent weeks, we think the price of iron ore will ultimately be driven even lower by less favourable fundamentals over the rest of the year.

26 May 2021

More from Caroline Bain

Commodities Update

China PMIs may be as good as it gets

The key takeaways from China’s May survey data are that while demand remains robust, supply shortages are leading to inventory drawdowns and price inflation. The data are broadly positive for commodity demand, but we think the withdrawal of fiscal stimulus will slow economic activity in the coming months.

1 June 2021

Industrial Metals Update

Calling time on the rally in US steel prices

Limited domestic supply, expensive imports and strong growth in demand have fuelled the rally in US steel prices. But with supply set to improve, at a time of softer growth in demand, prices should fall.

26 May 2021

Metals Data Response

Global Steel Production (Apr.)

Global steel production rose again in April as lower output in India, in particular, was offset by sizeable jumps in production in China, Russia and Brazil. For now, virus-containment measures remain a key driver of global supply, but high global prices mean that where they can, producers are raising output.

21 May 2021
↑ Back to top