Base Metal Prices Increase Due to Uncertainty in Supply

The prices of most base metals increased on Monday, supported by the growing concern about the global energy supply and mixed data regarding employment in the US which increased the hopes for a slower rise of interest rates by the US Federal Reserve. 

More European companies are halting or cutting aluminum production due to high energy prices. Nevertheless, the market outlook improved because employment data in the US was published this past Friday, indicating a possible easing of Federal Reserve policy, even though it is still expected to increase the interest rate by 75 basis points for the third time this month. US businessmen hired more workers than expected in August 2022, but salaries increased moderately and the unemployment rate rose to 3.7 percent from 3.5 percent in July 2022.

The most-traded October agreement of aluminum in the Shanghai Futures Exchange Stock Market increased 2.1 percent per ton, while it increased 0.5 percent in the London Exchange, Market reaching US$2,307.5/t. Meanwhile, the most-traded September copper contract on the Shanghai Futures Exchange lost 0.3 percent to US$8,872.39/t.

What is more, copper increased 1.2 percent to CN¥60,580/t (US$8,736.66/t), tin increased 2.3 percent to CN¥177,330/t (US$25,573.98/t) and nickel 5.2 percent to CN¥169,570/t (US$24,454.86/t). Copper in the London Exchange Market lost 0.1 percent to US$7,627/t while zinc won 1.4 percent up to US$3,179.50/t and tin increased 1.1 percent to US$21,390/t. Nonetheless, the perspective on the metals demand took a hit due to the persistent COVID-19 restriction in China, the main metals consumer.

The relevance of copper has grown so much in recent years that it is now considered to be the "new oil" for rapidly developing industrial segments such as electric vehicle (EV) batteries and renewable energy infrastructure, reported Goldman Sachs. In an interview with MBN, Ralph Shearing, CEO, Altaley Mining, said base metals are experiencing something of a boom: “The long-term projections for copper are fantastic because of the global push for decarbonization and the reliance on copper as a key material. We see major opportunities.”

Nonetheless, due to market concerns, the International Copper Study Group (ICSG) updated its outlook for copper in 2022 and determined that global demand is expected to fall by 1.9 percent. However, global production is expected to increase by 4.3 percent in 2022 and 3.6 percent in 2023, mainly due to new mines and a more manageable global pandemic. Consequently, the world copper market is expected to record a surplus of 142,000 tons in 2022 and 352,000 tons in 2023.

Meanwhile, regarding other precious metals, spot silver decreased 1.3 percent to US$18.63/oz, platinum fell 0.8 percent to US$856.93/oz and palladium gained 0.9 percent, up to US$2,128.55/oz.