The recovery in base metals continues; Copper reclaims $7,000, Nickel at $16,000

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Being in the midst of a health crisis that translated into an economic one, the one segment that should be most affected should be industrial metals. But China’s quick recovery has not just saved the day for the industrial metals complex but also caused prices to be perched at multi-month highs. LME Aluminum, Copper, Nickel prices are soaring to new highs with the rally especially picking up pace in Aluminum and Nickel in the last couple of weeks. 

Copper, the pliable metal that it is, finds usage in a variety of industries and has seen the largest bounce of 60% from April lows to climb to $7000/tn, the highest in 28 months. Nickel is seeing a lot of action amidst the chatter around EVs and clean energy during the recent LME webinar, a segment where Nickel finds usage. The metal has surged to $16000/tn from $11000 seen in March-April. Aluminum, having rallied 30% from the lows, a little lesser than its base metal peers is now playing catch up.

An interesting ratio to track is the Gold Copper ratio. With Copper prices indicating the level of economic activity (the more the activity the higher the price) and Gold being a safe haven asset, the 2 do make unlikely bedfellows. But this ratio was hovering around 6000-8000 between 2016-18 and now has surged to 10000, indicating that Copper, even at $7000 is still significantly cheap compared to Gold and perhaps pointing to more room for a rally.

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