Energy crisis and inflation fears to propel base metals – ING
15.10.2021, 13:41

Energy crisis and inflation fears to propel base metals – ING

Zinc (LME) surged to more than $3,700/t on Friday while aluminium remains comfortably above $3,100/t. As for copper, LME prices have returned to over $10,000/t. An intensifying energy crisis and heightened inflation fears are reigniting investor enthusiasm for base metals.

Energy crisis and inflation fears to fuel metals  

“The energy crisis has added fuel to the inflation debate in Europe, and rising energy costs will certainly push headline inflation higher for some time. Meanwhile, our US economist has pointed out that there are cracks in the Federal Reserve’s ‘transitory’ narrative in terms of inflation.”  

“Fears of inflation could increase demand for metals as there is a perception that they are a hedge against inflation, which is especially true for copper. In the meantime, a retreat in US real rates, along with the broad trade-weighted dollar index over the last couple of days, is also driving momentum.”

“The recent stronger renminbi has accentuated the broader demand expectations for commodities from China and has led to the open of import arbitrage in some metals. The broad trade-weighted renminbi is up nearly 6%.”

 

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