iifl-logo-icon 1
IIFL

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

Why have prices of industrial metal commodities risen in the past 3 months?

27 May 2024 , 05:13 PM

Prices of industrial metal commodities have risen since March 2024. Copper price has increased from $ 3.7 per pound at the start of March to $ 4.736 per pound on May 27th. This is an increase of 28% in the period. Aluminum price has risen from $ 2221 per ton at the start of March to $2662 per ton. This is an increase of 19.8% in the period. Zinc has risen from $2,389 per ton at the start of March to $3,057 per ton on 27th May. This is an increase of 27.9%. Other industrial commodities have shown similar price trends. According to The Economist Commodity Price Index, as on 14th May, 2024, industrial commodity prices, on average, are up by 14.6%.

Causes for increase in prices of industrial commodities

Industrial commodities are metals and other commodities that are used as raw materials in the production of other goods. The increase in the price of industrial commodities this year has been because of three factors. One is the expectation that economic growth in countries around the world will pick up as central banks start cutting down interest rates. Lower interest rates tend to increase demand in the economy. Interest sensitive consumption and investment pick up when interest rates go down. This in turn increases demand for industrial commodities.

The other factor is the expectation that China’s economy will pick up in 2024 after three years of economic devastation because of draconian Covid lockdowns. China is a huge manufacturing powerhouse. An economic recovery there will drive up the demand for commodities.

A third factor is increase in demand for Electric Vehicles (EVs). Commodities such as copper find more use in EVs than in conventional gasoline driven cars. A typical EV needs four times more copper in its manufacturing than what a typical gasoline driven combustion engine car needs.

When will central banks start cutting down interest rates?

The rise in price of industrial commodities in the past three months has been due to some actual increase in demand and some on the expectation that demand will go up in future. Interest rate cut cycle has still not been started by US Federal Reserve or other major central banks.  European Central Bank has said that it will start cutting down interest rates from June. China’s economic recovery continues to be fragile. Demand remains weak there. The real estate sector is in severe crisis. However, China’s EV manufacturing sector has emerged as a powerhouse.

Commodity prices may show some price reversal if interest rate cuts by major central banks are not as per expectations. If economic recovery does not happen as per expectations, then also commodity prices may see some downward pressure.

On MCX, Copper futures for June delivery is currently trading at around Rs 896 per kilogram.  Copper futures for September delivery at CME are trading currently at $4.7490 per pound. This is slightly higher than the current spot price of $4.736 per pound.

 

Related Tags

  • copper
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More

Most Read News

Indices end lower
21 Jun 2024|03:40 PM
Market Update: Nifty and Sensex Dip
21 Jun 2024|01:47 PM
Read More
Knowledge Centerplus
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Knowledge Centerplus

Follow us on

facebooktwitterrssyoutubeinstagramlinkedin

2024, IIFL Securities Ltd. All Rights Reserved

ATTENTION INVESTORS
  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

RISK DISCLOSURE ON DERIVATIVES
  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

plus
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.