Will the base metals rally last?

published 29 October 2020

Doctor Copper is in fine form, reports Tom Howard in The Times. The red metal hit $7,000 a tonne last week, a 28-month high. Used in everything from “electric vehicles to telecoms to water pipes”, it is a key gauge of the health of the global economy. Copper has gained more than 10% this year.

The principal cause has been soaring Chinese demand, says Andy Home on Reuters. Smelters are racing to keep up with a construction and infrastructure boom triggered by a stimulus. By October China had already imported more refined copper than it did during the whole of last year. Bulls are also banking on higher US demand if Biden passes green spending plans, adds Howard. Meanwhile, civil strife in Chile (see page 12) is contributing to supply disruptions; the country accounts for 30% of global copper supply.

Other metals are also shining, writes Will Horner in The Wall Street Journal. Tin has hit a 15-month high. Aluminium had lagged its peers thanks to a “glut” of stockpiles but is now rising. Close to 18-month highs, the metal has been lifted by robust global car demand and speculators banking on a catch-up rally. But don’t bet on an “out-and-out bull run”, cautions Capital Economics. Beyond China, the metals demand outlook remains shaky. The rally may have a bit further to run from here, but by 2022 ebbing Chinese stimulus could see prices heading back down.

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.