Drivers of Aluminium and Copper Market Price
September 2007
Since 2005 we have provided commentary of metal price movements. The events of week commencing 10 September 2006, driven by the global credit crunch and the subsequent difficulties that Northern Rock is experiencing adds to the interesting outlook for base metal prices to the close of 2007.
Fundamentals
Aluminium has underperformed the bull runs of the last few years despite numerous spikes. However, supply issues at present mean that there is limited chance of significant gains in the near term and maybe, uncommon to base metals, it will not have too far to fall if the choppy trading supports a fall. Recent experience suggests that a prolonged period of reducing prices would need to be prompted by a significant shock.
The recent and reasonably sustained rally in copper looks set to continue. Stocks should tighten in light of continued supply problems, most notably in South America and the impact of Chineese re-stocking.
So to the future. There has not so far been panic buying into gold and the worldwide commodity fundamentals and world economy seem strong. Of course, the economy could be on a knifes edge and once sub-prime really bites corrections will follow.
For the previous article concerning commodity prices please follow this link.