Bad days ahead for base metals as supply races past demand

The supply growth is outstripping demand growth for most of the key base metals globally

- Ujival Jauhari

The continued mismatch in demand and supply of base metals like aluminium, copper and zinc will keep their price outlook weak in the near term, analysts said.

The supply growth is outstripping demand growth for most key base metals such as aluminium, zinc and copper globally, Jayant Roy, senior vice-president and group head of corporate sector ratings at ICRA, said. This, analysts said, is likely to keep their prices under check in the near term.

After rising sharply during the first quarter of 2022 post the start of the Russia-Ukraine war, base metal prices corrected regularly and significantly in the quarters after that. Some rise was seen at the year-end and in early 2023, encouraged by opening of the Chinese economy as covid-19 restrictions eased.

Nevertheless, the rally fizzled as Chinese demand did not meet expectations. China remains the largest consumer of commodities. Analysts now do not expect much recovery in demand and prices any time soon amidst global slowdown.