ANZ Observes Metal Prices Approaching Bottom

2 min read | August 01, 2024 11:17 PM PDT | By Team Kalkine Media

ANZ Observes Metal Prices Approaching Bottom — Image source: Shutterstock

Current Market Dynamics

Recent months have seen a notable decline in industrial metal prices, with copper, aluminium, and nickel down between 18% and 26% from their peaks in May. The downturn has been attributed to weaker-than-expected demand from China, despite various measures aimed at stimulating economic growth. Investors have reacted to this lackluster demand by unwinding previously high positions in these metals.

Price Projections and Supply Challenges

Looking ahead, projections indicate that copper prices may stabilize at approximately $9,800 per tonne, while aluminium is expected to hover around $2,500 per tonne. However, forecasts for nickel have been revised downward, with an anticipated price of $17,500 per tonne by December.

Challenges in the copper supply chain are anticipated to keep the concentrate market tight, which could lead to reduced output of refined copper, particularly within China. The industrial metal market is expected to face continued pressures, with supply constraints playing a significant role.

For aluminium and nickel, there are expectations of price support from production cost perspectives. Aluminium prices may benefit from reduced supply as smelters cut back production in response to narrowing margins and stricter emissions regulations. Similarly, the closure of nickel mines is projected to help rebalance the market, providing some stability to nickel prices.

Future Outlook

The combination of tighter supply and expected improvements in demand is likely to influence metal prices in the upcoming months. As the market adjusts to these dynamics, stakeholders in the metals industry, including major players like BHP Group Ltd (ASX:BHP) and Rio Tinto Ltd (ASX:RIO), will be closely monitoring these developments for indications of price stabilization and potential growth.

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