Industrial metals prices have recovered but remain vulnerable
by David Fleschen
Industrial metals prices have recovered from last month's weakness in the wake of market turbulence, but remain vulnerable to setbacks, as was seen again at the beginning of the week. Most metals came under renewed pressure after the sharp rise in oil prices revived economic concerns. In addition, the market still seems sceptical about a recovery in demand in China, the most important sales market. And indeed, the picture here is mixed so far. The official purchasing managers' indices last week signalled a further significant improvement in sentiment in March, especially in the sectors outside manufacturing, which include construction. From a market perspective, however, the slight - albeit expected - decline in the manufacturing index was sobering.
This underlines that industry, which is important for the demand of industrial metals, is still struggling to find its feet three months after the end of the Corona restrictions. The Caixin Index published yesterday, which mainly tracks the smaller non-state-owned enterprises, even disappointed with a sharper decline. However, our economists expect the post-Corona recovery to pick up speed, especially in the second quarter. Until the figures reflect this, however, industrial metal prices are likely to struggle to make more significant gains.
Source: Commerzbank Research, Photo: Fotolia