Weak demand and the world’s economic problems might keep metals under pressure

As the demand picture worsens and the global economy experiences issues as a result of rising interest rates, analysts who follow commodities predict that metal prices will likely be under pressure for the remainder of the year. A further drag on metal prices, which have been falling over the past few weeks, is China’s efforts to curb the COVID outbreak with a pledge to “dynamic zero.” Compared to a month ago, the cost of important metals like copper has decreased by about 3%, and the cost of steel has increased by more than 3.5%. The prices of nickel, zinc, and tin have all decreased by 8%, 4%, and 8% respectively.

A couple of commodities have defied the trend: lead has increased by more than 8%, and aluminium is up a little bit. The London Metal Exchange (LME) index, which includes copper, aluminium, zinc, lead, tin, and nickel, has dropped from 3,583 to 3,583 over the past month by 2.5 % and by 20 % since 2022 started.

“According to reports from Shanghai Metal Market (SMM), the U.S. Fed is expected to hike interest rates by 75 basis points at its meeting in November and further restrict liquidity due to high U.S. inflation figures in September. For copper prices, this is unfavourable. According to the report, copper prices were negatively impacted by last week’s decline in crude oil prices as a result of worries about the world economy. Nickel and copper prices this year, according to Fitch Solutions, are still higher than prior lows.

Iron ore prices have levelled out at roughly $95 per tonne, and composite steel indexes are also indicating reductions in the 2–3 % range monthly. It stated that “recession fears and waning global manufacturing activity” were contributing factors to the dismal short-term demand outlook. According to Fitch Solutions, the only factors pushing prices up in the current environment as a result of declining stocks and a relatively little increase in miner capex are supply restrictions and persistently high energy prices.

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