Metal prices rise ever stronger - Probably highly speculation driven

At the moment metal prices know only one way - upwards. This morning copper rose to USD 6,650 per tonne, its highest level in over two years. Nickel, zinc and lead are recording new highs for several months. Iron ore yesterday jumped above the USD 120 per tonne mark and today, at USD 123, is at its highest level in 6½ years. As before, it is essentially macroeconomic factors that continue to drive metal prices higher: The S&P 500 equity index set a new record high yesterday, reflecting the risk appetite of market participants. In addition, the trade-weighted Dollar Index has fallen to its lowest level since May 2018. And finally, much better than expected data was released on the U.S. housing market.

In the case of copper, this is compounded by the ongoing reduction in inventories in the LME warehouses. As the LME reported yesterday, stocks have fallen to the lowest level in 13 years (107.5 thousand tonnes). In the SHFE warehouses, however, stocks have risen in the last few weeks, so that some of the mining on the LME could be shifts. The fact that US President Trump himself, according to his own statement last week, cancelled the planned talks with China himself and does not want to talk to China about the trade agreement at the moment, does not play a role in the market. Nor do the market participants seem to be interested in the rising number of new infections with the corona virus, which in our opinion carry the risk of new lockdowns. Cautious statements on the economic outlook by the world's largest mining company in its annual reporting are also being ignored. As yesterday's LME statistics show, the recent rise in the price of metals has also been strongly speculative driven, with net long positions in almost all of them having recently been significantly extended.

Source: Commerzbank Research, Photo: Fotolia