Base metals surge in value


Zinc and aluminium prices reached unexpected levels on July 21 with zinc hitting a seven year high. London Metal Exchange zinc futures on the London Metals Exchange (LME) have risen to $1,255.50 a tonne - a price not reached since November 1997. Demand for the metals is driven by China which, as we have reported recently, has indicated above-expectation performance results in manufacturing and construction. AME Mineral Economics has said that world zinc consumption could rise 260,000 tonnes in 2005, resulting in a global deficit of 280,000 tonnes.

China consumes about one-fifth of the world's zinc, and analysts estimate that demand from China will rise by up to 18 percent in 2005. Globally its primary use is for coating steel and rustproofing in the automotive industry – and it is commonly used to galvanise exposed metal products (see photo).

Aluminium prices rose by two percent to more than $2,000 a tonne on the LME, the strongest since the end of February 2013. Even nickel recovered from earlier weakness to rebound 1.1 percent to hit $18,872 a tonne, though nickel prices are expected to continue to struggle. Nickel was one of the worst performing metals in 2013 due to oversupply and feeble demand, but it has recovered well over the course of this year. Prices rose sharply as Indonesia, one of the world's leading nickel ore suppliers, placed a ban on exports of minerals, raising supply chain concerns. However, nickel prices could come under pressure in the coming year thanks to uncertainty over the Indonesian political situation and other geopolitical factors.