Base Metal Prices to Soften After Robust Price Gains Last Year

SEATTLE (Scrap Monster): According to ING analysts, the base metal prices are set to cool off in 2022, following recording robust price gains during the previous year. It must be noted that the rally in prices was mainly led by supply shortage and boosted demand, driven mainly by aluminum and tin.

ING analyst Wenyu Yao noted that 2021 had been a strong year, which reported demand recovery from the pandemic, with most metals markets falling to deficits. ING expects 2022 to be a year of normalization. The demand growth is expected to moderate. Also, the limited supply of metals should keep prices high, at least in the near term.  

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The LME index comprising copper, aluminum, nickel, zinc, lead and tin surged higher by almost one-third during the previous year, after rising by one-fifth in 2020. LME aluminum was up by 42% in 2021, recording its biggest gain since 2009. Zinc and Lead posted their biggest gains since 2017. Nickel recorded its largest yearly jump since 2019, whereas Tin hit the highest level in almost two decades.

The analysts foresee troubles ahead in Chinese factory activity. The country has till date served as the main source of demand for base metals. However, the trend has started to come to an end. The gradual decline in economic growth will lead to reduced demand for metals in the country, they added.