Base metals brace for challenging times as supply outpaces demand.
Analysts have stated that there will be challenging times ahead for base metals such as aluminium, copper, and zinc due to an ongoing disparity between supply and demand. This imbalance is expected to result in a bearish price outlook for these metals in the near future.
Jayant Roy, senior vice-president and group head of corporate sector ratings at ICRA, said “The supply growth is outstripping demand growth for most key base metals such as aluminium, zinc and copper globally.”
After rising sharply during the first quarter of 2022 post the start of the Russia-Ukraine war, base metal prices corrected regularly and significantly in the quarters after that. Some rise was seen at the year-end and in early 2023, encouraged by opening of the Chinese economy as covid-19 restrictions eased.
Nevertheless, the rally fizzled as Chinese demand did not meet expectations. China remains the largest consumer of commodities. Analysts now do not expect much recovery in demand and prices any time soon amidst global slowdown.