Varying reaction of industrial metals
The poor overall sentiment should have a negative effect on all industrial metals today. After all a risk that the US wonâ€™t deliver the promised stimulus is a serious issue for global demand and could derail the recovery which is in case of many countries still at the stage of moving from soft data (high optimism since the turn of the year) to real effects in volumes of sales and production.
We can observe that industrial metals are not moving all in the same way, however. Out of the three depicted below only Zinc is presenting the reaction we would assume. What about the rest?
Copper has its own issues due to the fact that the workers of the Escondida facility in Chile, the largest copper mine in the world, (2500 union members went on strike), after a 6-week strike want to resume talks. There was a meeting yesterday between the union leaders and the company – the first one in a month, after some concessions were made by BHP.
When it comes to Nickel, the commodity is made resilient by market observations that the current estimates of global refined consumption look the most favorable against production in 10 years. The stocks-to-use ratio remains elevated which may make delay positive price developments, but on the other hand lower output in Philippines may lead to relatively quick correction of this ratio.
source: Bloomberg, World Bureau of Metal Statistics