World Economy

Base Metals Growth Forecast, But Market Remains Under Pressure

Base metals remain vulnerable to market factors.Base metals remain vulnerable to market factors.

The market for base metals is projected to grow at a robust rate for the next few years, although seasonal and occasional movements and unexpected changes in the industry will cause the market to remain under pressure.

Investors, industry players, consumers and other shareholders should be aware of this economic dynamic that will continue for a significant period of time. There will be tensions that will last for the foreseeable future, but the overall prognosis of the base metals markets will be sound, Born2Invest reported.

Some of the more important minerals under this category that should be monitored include aluminum, cobalt, copper, lead and zinc. According to Financial Buzz, what makes these metals always in demand is the vital way they provide support to systems and industries that literally power the world, such as the water systems, electric generators, building and construction.

Governments all over the world are boosting their infrastructure, strengthening their cities and converting their once rustic areas into urban places. As a result, the demand for these base metals will continue to rise at a projected compound annual growth rate of 5.01% in the next years. It is estimated that production will reach 160.19 million metric tons by the year 2023.

Financial Buzz elaborates that zinc is valued because of its properties that slow down corrosion, which is essential in preserving the structural integrity of buildings and equipment. Industries like the automobile sector bank the resilience of their vehicles on aluminum, while portable batteries that are critical for huge amounts of energy storage are highly dependent on zinc.

Fast Markets reports the situation in several countries. In the United Kingdom, most of the base metal prices trading on the London Stock Exchange during the first week of December were down by about 0.5%. The casualties include copper, down by 0.1% and lead which slid down by 1.2%. Tin, however, seems to be putting up a fight and gained by 0.2%.

Fast Market continues to report that the situation is similar in China. As shown in the Shanghai Futures Exchange Monday, aluminum took a hit by 1.7%, and nickel slid down by 0.9%. Copper and zinc have also decreased their value by 0.5%. Meanwhile, the Dalian Commodity Exchange records that the price for iron ore dropped by a significant 7.5%.

An earlier report by Fast Markets reiterates that the base metals do remain vulnerable to market factors. However, one reason for cautious optimism, which can support the projected and sustainable CAGR, is that base metals have shown over time that they are resilient. They are capable of “self-righting” and will rally and bounce back once the situation surrounding them change.

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