China adds shine to base metals

Metals prices have rallied hard after China's government unveiling plans for new infrastructure building, including railways, power lines and electric car charging points.

It is starting to feel “a lot like” 2009-2010 again in the metals market, says Andy Home on Reuters. Few expected a repeat of China’s post-financial crisis “shock and awe” stimulus in 2020, but it is increasingly clear that that is what we are getting. The country’s leadership has defied market expectations of a more socially orientated stimulus programme, instead unveiling plans for new railways, power lines and electric car charging points. Metals prices have reacted by going on a “super-charged rally”. The S&P GSCI Iron Ore index has returned more than 28% so far this year. Seaborne prices for the steel-making ingredient have hit a six-year high. 

Copper has also been breaking new ground, says Amrith Ramkumar in The Wall Street Journal. The metal briefly rose through $3 a pound in the US earlier this month, the first time it had done so in over two years. As with iron ore, robust Chinese demand is the crucial factor: roughly half of global copper production is consumed in the country.  

China’s appetite for industrial metals is likely to remain strong for at least the next 18 months, says Kieran Clancy of Capital Economics. Iron ore imports hit a record high of 112.65 million metric tons in July, a 24% increase on the year before. Perhaps the best bet is copper, whose supply is constrained by problems at Latin American mines. “Doctor Copper” is poised to lead the industrial metals rally higher.

Recommended

Is now a good time to buy a house?
Property

Is now a good time to buy a house?

Is now a good time to buy a house? That’s something many people might be asking as house prices, and mortgage rates, begin to decline
30 Jan 2023
Government consults on small pensions pots - here’s what to do if you have several small pension pots
Pensions

Government consults on small pensions pots - here’s what to do if you have several small pension pots

The Department for Work and Pensions has started consulting on helping workers who hold a number of small pension pots. We look at how the government …
30 Jan 2023
Self-assessment tax returns: what you need to know about getting your tax bill right
Income tax

Self-assessment tax returns: what you need to know about getting your tax bill right

Understanding how self assessment works can help you ensure you pay the right amount of tax, as well as avoid penalties for missing the deadline.
30 Jan 2023
Zoopla: house prices stalled at the end of 2022
House prices

Zoopla: house prices stalled at the end of 2022

The property market looks primed for a slow burn start, and buyers are turning towards flats instead of homes as they prioritise affordability, latest…
30 Jan 2023

Most Popular

Council tax increases 2023 – how much more will you pay?
Tax

Council tax increases 2023 – how much more will you pay?

Your council tax bill will go up in April - we reveal the councils that have confirmed what this year’s increase will be.
23 Jan 2023
Will energy prices go down in 2023?
Personal finance

Will energy prices go down in 2023?

Wholesale gas prices are on a downward trajectory, but does this mean lower energy bills later this year?
27 Jan 2023
Share tips of the week - 27 January 2023
Investments

Share tips of the week - 27 January 2023

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages
27 Jan 2023