Beckett Bronze produces cast bronze precision-machined parts and continuous cast bars. Castings are manufactured at the East 20th Street plant. The West 23rd Street plant produces finished machined parts and has about 75 machine tools including CNC lathes.
Prices for industrial metals including copper, aluminum had retreated from 2022 highs, but prospect of greater demand from China has sparked recent gains
Signs of an end to China’s pandemic lockdowns have sparked a resurgence in prices for industrial metals.
Traders are betting that the possible end of three years of China’s stringent pandemic restrictions could spark greater demand from the world’s leading user of commodities. U.S. copper futures recently recorded their largest one-day percentage gain since 2009. Zinc and tin trading in London had their best week since summer, while aluminum jumped over 6%.
The rebound extends a wild year for markets in the metals used to make everything from aircraft to electrical wire to cars. Prices for copper, aluminum and tin in London hit records earlier this year, boosted by supply constraints from the war in Ukraine, climbing energy prices and pandemic reopenings.
Then recession fears and lockdowns in China dragged a basket of industrial metals that trade in London to their worst seven-month stretch in more than a decade.
Now metals prices are surging again, on pace for their best month in over a decade, a climb that could complicate the outlook for inflation. Stocks posted their biggest gains since 2020 on Nov. 10 after economic data showed the consumer-price index rose less than expected in October, fueling bets that the Federal Reserve’s most-aggressive rate hikes may be over. The Fed’s inflation-fighting efforts have jarred markets from stocks to bonds to oil this year, sending the S&P 500 down 17%.
The prospect of milder inflation and easing pandemic restrictions in China have also dragged the dollar back from its 2022 highs. That has supported prices for metals, which are denominated in dollars and become cheaper for foreign investors when the U.S. currency weakens.
“I do believe over a longer run the metal price jump is warranted because China will reopen,” said Liqian Ren, director of Modern Alpha at WisdomTree Asset Management.
The metals rally has lifted shares of producers, helping make the materials sector the S&P 500’s best-performing group this month. So far in November, mining company Freeport-McMoRan Inc. has added 20%, Rio Tinto PLC has gained 19% in London and Anglo American PLC has climbed 27%.
Hakan Kaya, senior portfolio manager at Neuberger Berman, said he is still looking to add to his physical copper, aluminum and zinc holdings. Mr. Kaya said a global transition away from fossil fuels could intensify shortages of critical battery metals needed for green energy.
The Neuberger Berman Commodity Strategy exchange-traded fund has added 4.8% so far this month, compared with a 2.2% gain in the S&P 500.
“Supply is very tight, and people don’t realize it,” Mr. Kaya said.
Many still describe the rally as jittery. China’s growth has slowed, and the Fed’s attempts to fight inflation risk tipping the U.S. into recession. Chinese officials have reaffirmed their commitment to containing the virus, which continues to rage. Investors, including WisdomTree’s Ms. Ren, said any reopening will be slow, and demand may not climb as fast as many expect.
“This is one of the most severe cases of just how everything is not clear,” said Al Chu, portfolio manager at Newton Investment Management, who has been investing in commodities for the past 20 years. Mr. Chu also noted that a proxy for measuring market participation across commodities is declining. That means that liquidity is drying up, making it harder to conduct transactions without causing big moves, he added.
Economic data across the globe points to weakness for metals demand. New home sales in the U.S. and China are extending declines. In Europe, business activity contracted at its fastest pace in nearly two years in October. The Chinese economy expanded more strongly than expected in the latest report but fell short of the growth rate logged earlier in the year before widespread lockdowns hit the economy.
Metals producers are also warning of waning demand. Rio Tinto, one of the world’s largest mining companies, said at the recent London Metal Exchange Week that aluminum demand has slowed down considerably in recent months, a stark contrast from last year. Meanwhile, Freeport-McMoRan, one of the world’s biggest copper miners, lowered its copper sales guidance for 2023.
“The price move appeared to be anticipatory and financially driven by global macroeconomic conditions,” said Kathleen Quirk, president at Freeport, during the company’s recent earnings call.
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