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Commodity Champions: Metal prices under pressure; experts weigh in
The metal prices came under pressure this week on the back of slow manufacturing activity in the United States and lower factory activity in China. Reduced Chinese capacity has hurt aluminum in particular whereas the markets expect a deficit when it comes to copper, following an impressive rebound in the demand last year. To take a discussion forward CNBC-TV18’s Manisha Gupta spoke to Paul Hickin, Associate Director at S&P Global Platts and Francisco Blanch, Head of Global Commodities at Bank of America Securities.
The metal prices came under pressure this week on the back of slow manufacturing activity in the United States and lower factory activity in China.
Reduced Chinese capacity has hurt aluminum in particular whereas the markets expect a deficit when it comes to copper, following an impressive rebound in the demand last year.
Meanwhile, weak investor sentiment and increased scrap supply have forced the gold prices to lower this year. This has also led to investors rushing to buy silver instead.
The mood on nickel, however, is far from upbeat as the EV demand is expected to rise in the coming years as well as the expectations of supply surplus in 2021.
The pressure is equally high in oil markets where experts say that Brent prices could touch $100 by the end of next year as the market continues to tighten.
To take a discussion forward CNBC-TV18’s Manisha Gupta spoke to Paul Hickin, Associate Director at S&P Global Platts, and Francisco Blanch, Head of Global Commodities at Bank of America Securities.
On metals, Paul Hickin said, “Demand has been the big factor in the market, across the commodity spectrum, oil as well as metals. I think this has been with China especially being a big factor. We have seen with the green energy transition moves, there has been a big talk of the commodity supercycle and especially for metals doesn't have OPEC plus, to help mitigate price in the same way.”
Speaking about nickel, Francisco said, the metal’s prices have already rallied quite a bit and the current levels are consistent with Indonesia adding more supply. “So we are not as bullish now and we are not bearish really. We think prices will be sustained for nickel,” he said.
He, however, added that ultimately at this price point, the ability of Indonesia to push out nickel pig iron to essentially produce more high-quality hybrid nickel is actually pretty substantial. So, he doesn’t see as much upside in the case of nickel.
“We were very bullish initially but now we have tamed our expectations, although we still see a lot of consumption,” he added.
For the full interview, watch the accompanying video...
(Edited by : Kanishka Sarkar)
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