The prices of key industrial metals have been enjoying a “spectacular rally”, says Buttonwood in The Economist. Copper has jumped by about 25% since the start of April, while iron ore has delivered 12% gains for the year to date.
Commodity bulls have China to thank for this rapid recovery, says Buttonwood. Steel blast furnaces were running at 92% capacity in the first week of June, which is above normal levels. For all the talk of the Middle Kingdom’s shift to a consumer economy, the authorities seem happy to use the old method of stoking a construction boom when a round of stimulus is needed.
Iron ore has emerged in recent years as the world’s “second most important commodity behind oil”, say Julien Hall And Fiona Boal in the Financial Times. The S&P GSCI Iron Ore index has more than tripled over the last seven years while many other metals have stalled. Now more liquid futures markets are making the steel ingredient easier than ever to trade. That makes iron ore an attractive “proxy” investment for those wishing to bet on the Chinese manufacturing sector without buying in directly. The current metals rally is also being driven by supply constraints, says Myra Saefong in Barron’s. Mine closures in pandemic-hit Latin America mean less iron ore and copper reaching global markets. Yet copper prices may struggle now amid a highly uncertain few months ahead for the global economy, says Johann Wiebe of Refinitiv.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The best bet may well be silver, says Taki Tsaklanos of InvestingHaven.com. As both an industrial and a precious metal it stands to gain even if another virus wave triggers renewed lockdowns. That is likely to mean even more emergency money printing, which is a boon for precious metals. Currently trading around $17.80/oz, he expects silver to approach $21/oz before the end of the year.
-
Should you invest in Trainline?Ticket seller Trainline offers a useful service – and good prospects for investors
-
Investing in a dangerous world: key takeaways from the MoneyWeek SummitIf you couldn’t get a ticket to MoneyWeek’s summit, here’s an overview of what you missed
-
DCC: a top-notch company going cheapDCC has a stellar long-term record and promising prospects. It has been unfairly marked down
-
How investors can use options to navigate a turbulent worldExplainer Options can be a useful solution for investors to protect and grow their wealth in volatile times.
-
Invest in Hilton Foods: a tasty UK food supplierHilton Foods is a keenly priced opportunity in an unglamorous sector
-
HSBC stocks jump – is its cost-cutting plan already paying off?HSBC's reorganisation has left questions unanswered, but otherwise the banking sector is in robust health
-
Lock in an 11% yield with SabreTips Sabre, a best-in-class company is undervalued due to low profits in the motor insurance industry. Should you invest?
-
Byju’s – the startling rise and fallIndia’s educational technology start-up Byju's attracted big-name backers and soared to vertiginous heights during Covid. It has now plummeted. What happened?
