Metals Bounce Back From June Low
China steel demand better than expected
Base metal prices on the Shanghai Futures Exchange have recovered significantly from their June lows with steel trading near its 52-week high.
Here are the key takeaways from an interview with Jeremy East, an independent Hong-Kong-based commodity consultant on where metal prices are headed.
- China’s steel demand has been stronger than expected. The price of steel is reflected through iron ore which saw a sharp cut earlier this year. In the last six days, we have seen an uptick in iron ore.
- Nickel, which is used in stainless steel, has also seen an uptick on the back of Chinese demand. Copper and aluminium do not seem to be moving in the same direction as steel and nickel.
- Higher volatility, more political uncertainty coupled with a weak dollar augurs well for gold.
- Bloomberg data showed a 12 percent recovery in silver compared with 2 percent recovery in gold from their respective July lows. Gold has likely been influenced by market volatility.