Metal prices could move by another 10%: Probis Securities

Jonathan Barratt, chief investment officer (CIO) at Probis Securities, on Tuesday, said that prices of metals could move by another 10 percent.

The shares of metal companies soared on October 18 amid higher global prices of base metals, which has come in as a boon for these companies. An uptick in metal prices will push realisations higher and in turn, improve the profitability of metal firms.

“Prices can continue; copper close to or at a record high. It's very hard to try and look at it when prices continue to move here, when you do see that shortness of supply. China's GDP, as we saw, came back; a little bit of a trickle there could help contain prices from moving. I think, we will see prices move another 10 percent. It really depends on how that is shaping up, also how we are shaping up with the pandemic (COVID-19) as well,” Barratt said, in an interview to CNBC-TV18.

On supply pressure, he said, “It's obviously a very strong movement across the board. When metals go up, you try and find what the main reasons are. And it does seem to be that a lot of issues about supply goes across a lot of the commodity space. The spread between the cash market and the three-month mark has been at record levels close to USD 1,000 - that indicates that there is no supply in the short-term and that people will have to wait for the long-term in order to get fit. So, it is here for a while and any shock will actually substantiate the rises that we are currently seeing.”

Barratt believes that crude oil prices are topping out. “For the rest of the year, we could see a spike naturally through a hurricane or in some other area, but at the end of the day you will see supply meet demand and prices should contain themselves,” he said.

For the entire interview, watch the video