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Lead, Zinc and Copper – Black Horses in the Financial Market. Forecasting Futures Behaviour for Industrial Metals

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Lead, Zinc and Copper – Black Horses in the Financial Market. Forecasting Futures Behaviour for Industrial Metals

Lead, Zinc and Copper – Black Horses in the Financial Market. Forecasting Futures Behaviour for Industrial Metals
December 06
10:30 2016

Traders are following the price movement of currency pairs, but forget to pay attention to more material assets – metals. Neither gold nor silver, though, but industrial metals that are used in the whole world. Recently prices for industrial metals have started growing. Why it happened and what  shall we expect in the future? You can find this information in an analytical article on our portal.

 

Factors that influence the prices growth for zinc, lead and copper

Traders in the whole world are following the prices movements of currencies, especially the dollar and euro, and meanwhile the metal prices are growing. The word Metals is associated with gold and silver, though we aren’t going to speak about them.

Zinc, copper and lead are growing in value. It is connected with several factors, though the most intriguing one is the Trump`s victory in the elections and his promise to invest 500 billions of the US dollars in the infrastructure of the USA. Nobody but Trump knows if that is the truth. But the influence of this statement on the metal futures is evident.

Though, there are some more down-to- earth factors that influence the metal price. One of the most important factors is the production cut of zinc, copper and lead, despite the constant rate growth of their consumption.

 

Is that all serious?

The Shanghai stock exchange traded lead futures for January at 3,120 US dollars per ton. It means that the price has grown by 68%. The zinc futures were being traded at 1,900 US dollars per ton, which shows the increase rate by 80%, and the price of copper futures was 7 130 US dollars per ton, which makes 38% of the growth.

The growth rate of industrial metals price is about 30%, and this comes after a three-year long period, when metals were constantly falling in price.

 

Metals and oil: if there is a connection?

One more important factor that surged the prices for the industrial metals is the OPEC meeting and the Agreement about the oil production limitations. The OPEC members did not manage to start discussion when the prices for oil started growing. With them,  the prices for industrial metals grew as well.

 

The main factor is the speculation in the Chinese market

The Chinese economy hasn’t been stable recently. That is why Chinese investors started looking for reliable investment options. The currency is a highly liquid asset, and a highly volatile as well. Though, metal, moreover, industrial metal, like copper, zinc and lead, are less volatile.

Hence, in the market traders started buying metal, the storage volumes are accordingly decreasing. The production is being cut.

 

What shall do those who are outside of China?

The question stays open. In cases when the excitement is created artificially, investors, those who are more careful, prefer to wait, and those who are more risky, prefer to earn.

 

Futures for metal – what influences their price?

The market of metals is very sensitive to many factors. Metals are produced not everywhere, though, they are widely used in the whole world. Hence, a strike or a riot will automatically increase the metal price.

The exchange rate also makes its influence, even though the indirect one – for an importing country, due to the exchange rate difference. The price depends on governmental embargos, some environmental factors that may stop the production, availability in the warehouse and some others.

 

What shall we expect from metals in future?

Price correction. They are being traded higher than they are. Moreover, the fuss around the Trump`s victory is calming down. Invest smartly!

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2 Comments

  1. Maria Wilson
    Maria Wilson December 06, 18:19

    Gold traders expect that this precious metal prices will rise in the coming year, as the powerful political uncertainty makes investors bet on it. This should lead to the fact that the world will rush to buy gold, which is a strong bastion of security.

    Reply to this comment
  2. Alexandr
    Alexandr December 06, 21:02

    The increase in the price of industrial metals is too fast and strong. I think we can expect the prices drop in the next three months.

    Reply to this comment

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