Metal Prices Extend Surge on Low Global Stockpiles

On Thursday, metal prices extended their rally as global stockpiles remained low amid Russia’s increasing economic isolation.

Accordingly, aluminum prices significantly hiked 4.60%, or 160.00 points, to a high of $3,638.00 per tonne.

Then, US copper futures rose 1.90% or 0.08 points to $4.76 per pound, hovering around a record territory.

Similarly, contracts linked to nickel skyrocketed 6.71% or 1,685.50 points to $26,788.50 per tonne.

At the same time, zinc soared 4.43%, or 166.00 points, to $3,912.00 per metric tonne.

The global stockpiles have shrunk dramatically. Aluminum orders rose by 70,700 tons, the highest since June, while inventories remained tight.

Subsequently, freely-available nickel stockpiles skidded to the lowest since December 2019. Likewise, zinc holdings inched down to the lowest since July 2020.

Eventually, Chile, the producer of more than a quarter of global copper production, recorded its lowest January output since 2011.

In China, copper inventories dropped to 200,000 tonnes in February, not enough to cover three days of consumption worldwide.

In addition, fears spread about the possible impact of the Ukraine-Russia crisis on worldwide growth.

Additionally, commodities markets were upended as corporate giants withdrew from Moscow. The fresh sanctions on the country led lenders to pull back from financing deals.

Then, concerns about supply disruption mounted, fueling the uptrend of metal prices.

The transport of commodities like metals is now increasingly difficult. Half of the world’s container ships will no longer go to and from Russia.

On Wednesday, the world’s three largest container shipping companies suspended cargo shipments in the country.

Consequently, the soaring fuel prices add upward pressure on metals due to the higher production spending. The spike in energy costs could lead to the further shutdown of smelters.

China also noted smelter closures following power shortages and actions to reduce carbon emissions.

Russia’s Disruption of Metals

Analysts explained that the deterrents on Russia, an essential metal supplier, will possibly turn into worldwide supply disruption.

Russia’s Rusal International is the world’s second-largest aluminum producer behind China. Its Norilsk city also accounts for about 10.00% of refined nickel output globally.

Moscow provided nearly 18.00% of China’s refined nickel imports last year. The country also made up about 12.00% of aluminum shipments in the world’s second-largest economy.

Meanwhile, traders also focused on the rising interest rates in developing countries while China grappled with a slowing economy.

Accordingly, the US Federal Reserve posed a hawkish stance on monetary-policy tightening,  boosting risk appetite across markets.