Industrial metals including copper and zinc have outperformed global stocks this year as signs of a revival in demand from Chinese manufacturers add to concerns over tighter global supply.
An index tracking the performance of six industrial metals on the London Metal Exchange has climbed 8 per cent since the start of 2024, outpacing a 6.3 per cent rise for MSCI’s index of worldwide stocks, The Financial Times reported.
The index, which also includes lead, aluminium, tin and nickel, has risen sharply this month as investors grow more confident that an extended period of high global interest rates, intended to curb inflation, will not choke off economic growth.
At the same time, analysts have raised concerns that production snags from miners will constrain supplies. “Hopes for a global recovery in demand this year are supporting higher prices for industrial metals,” said Ewa Manthey, a commodities strategist at ING.
Traders have also welcomed the first signs of returning demand from China, whose economic performance has sputtered since it came out of its tough-line coronavirus policies in December 2022.
The latest Chinese purchasing managers’ index, published at the end of March, signalled an expansion in factory activity in March for the first time since September. Copper has risen nearly 10 per cent since the start of 2024 and hit a 15-month high of $9,523 per metric tonne on Tuesday.
The metal, which has a wide range of uses including in construction, power lines and electric vehicles, is widely seen as a key barometer of global economic health.
The gains have come as analysts fret over the impact of tighter supplies from miners.
In March, Chinese copper smelters, which process more than half of the world’s supplies of the red metal, agreed to embark on rare joint production cuts in order to cope with the shortage of raw materials, although no final deal has yet been reached.
Morgan Stanley now expects mined copper output to fall 0.7 per cent this year.
