Metal prices in a downward pull
by David Fleschen
Metal prices fell by over 4% at the beginning of the week, but are still holding up relatively well. They are dragged down by oil prices and stock market sell-offs. Asian equity markets have lost more than 5% in some cases, while markets in Europe have slumped by up to 9%. Fears of a further massive spread of the corona virus also play a role here, which could stall the global economy. Copper falls to $ 5,440 a ton this morning, its lowest level in over three years. Aluminum is trading at a 3½-year low at USD 1,650 per tonne, zinc costs as little as last in May 2016 at USD 1,900 per tonne.
As long as the risk aversion of market participants remains high and the negative news, especially with regard to the corona virus, should not abate metal prices continue to fall. As soon as a floor is found, we believe that it will be an attractive way to hedge against medium to long-term rising metal prices. The fact that China published its trade statistics for January and February over the weekend is of no consequence this morning. The figures from the customs authority cannot be separated (only one number was published for both months together). However, if one takes the average of the past year and compares it with the data for January and February, at least there is no marked weakness in copper imports. Imports of iron ore were also not exceptionally low.
Source: Commerzbank Research, Photo: Fotolia