Base metals are making headlines as prices rally in early Q2 of 2024. The London Metals Exchange is bustling with activity as copper, aluminum, and zinc see significant movements in their forward markets.
Copper, often seen as a barometer for the global economy, has been on the rise, with futures settling at $4.007 per pound at the end of March. The rally continued into early Q2, with copper futures jumping 6.4% higher by mid-April.
Aluminum and zinc, two other key base metals, have also seen price shifts. Aluminum forwards fell in Q1 but rebounded with a 10.7% gain in early Q2, reaching $2,587 per ton. Meanwhile, LME zinc experienced a decline in Q1 but surged 16% higher in early Q2, hitting $2,828.25 per ton.
Stockpile levels at the LME warehouses provide insights into the metals’ fundamentals. While copper inventories fell, aluminum stocks edged higher, and zinc stockpiles rose in Q1. This mixed data in mid-April suggests a nuanced view of the base metals market.
China, a crucial player in the base metals industry, influences prices with its economic growth or contraction. Factors like climate change initiatives and production costs also impact base metals prices.
Investors seeking exposure to base metals can turn to the Invesco DB Base Metals Fund ETF, which provides direct exposure to the most liquid LME metals – copper, aluminum, and zinc. With prices showing signs of recovery and potential for further growth, base metals could be on track for a strong rally in the months ahead.
