Industrial metals markets had a quiet start to the week, with prices remaining stable as trading was halted in two of the world's largest economies, China and the United States, for public holidays. The closure of markets for the Lunar New Year holiday in China, the world's largest consumer of metals, and Presidents' Day in the United States resulted in significantly lower trading volumes, providing a period of calm after weeks of considerable volatility.
General context and importance of the event
Industrial metals, primarily copper, aluminum, and iron ore, are vital to the global economy, playing a crucial role in everything from construction and building materials to the automotive, electronics, and renewable energy industries. Historically, the prices of these metals have been closely linked to global economic growth. China plays a pivotal role in this market, consuming nearly half of the world's base metal production, meaning that any slowdown in its economic activity, even a temporary one due to holidays, has a direct impact on the global supply and demand balance.
Price movement details
On the London Metal Exchange, copper, often seen as a bellwether for the health of the global economy, held steady at around $12,900 a tonne. This stability follows a period of volatility for the red metal. Aluminum also held steady at $3,080 a tonne after falling 2.7% on Friday. In contrast, iron ore futures continued their downward trend, declining 0.3% to $96.50 a tonne in Singapore, marking their fifth consecutive weekly loss. This decline is attributed to record-high inventories at Chinese ports, coupled with increased production by major mining companies, creating a short-term supply surplus.
Expected impacts and future prospects
Internationally, this temporary stability provides a respite for industries reliant on these raw materials, giving them an opportunity to reassess costs and replan production. However, analysts are awaiting the return of Chinese markets from their extended holiday for clearer indications of genuine demand trends in the post-holiday period. Volatility is expected to return to the markets once full activity resumes, with fundamental factors such as global central bank policies to combat inflation, geopolitical tensions, and the clean energy transition remaining the primary drivers of prices in the medium to long term. Any strong economic data from China or the US after the holidays could push prices higher again, while any signs of slowing growth could exert renewed downward pressure.
