Industrial metal markets: Outlook becomes positive again

by David Fleschen

At the beginning of the week the metal markets are apparently in a good mood again. It is expected that the economy in many countries will recover after the easing of measures to combat the coronavirus and that demand for metals will therefore also increase. However, the verbal sabre-rattling between the USA and China and thus the possibility that the trade dispute between the two countries could flare up again is being ignored. At the beginning of the week copper rises again above USD 5,200 per tonne, all other metal prices also rise.

While the manufacturing sector in China appears to be recovering quickly - industrial production in April rose more strongly than expected compared with the previous year - the slowdown in the USA is only gradually becoming apparent. There, industrial production in April fell by a good 11% compared with the previous month. This was the sharpest slump since records began. In May, too, US industry is likely to have suffered heavily from the corona virus. However, this also appears to be only a marginal phenomenon.

Market participants are apparently looking ahead, for example to the National People's Congress in China, which is scheduled to take place later this week. No numerical GDP growth target could be announced for this year - we expect only a meager 1% increase due to the corona crisis. In return, a substantial increase in government spending is likely to be approved. As this will probably also affect infrastructure measures, industrial metals should benefit from this. Metal prices may already be anticipating this today.

Source: Commerzbank Research, Photo: Fotolia

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