Industrial Metals Make Up. Manic Metals Report 09/30/2024

The industrial metals are making up for lost time as China adds more stimulus and precious metals get a fear of heights as gold pulls back from record highs. Yet the dynamics for metals remain stronger that they have in decades.

Copper and aluminum soared as they are getting pumped up on Chinese stimulus. Reuters reported that the Chinese stocks swept to their biggest single-day gains in 16 years on Monday, with domestic A-shares registering their highest ever turnover, as investors scrambled to join a searing rally sparked by Beijing’s latest raft of stimulus measures.  Reuters said that “The CSI300 blue-chip index is now up nearly 30% from its February through, which by some market definitions suggests it is in a bull market, but much of the gains have happened very quickly and over a few sessions since last week.”

The same is true with copper. The copper market is in a structural shortage looking years out, but a China slowdown kept prices under wraps.

The FT reported in a must read that “ Copper producers have issued fresh warnings about price volatility for the red metal — vital for the clean energy transition — as the industry meets for its most important annual gathering, the London Metal Exchange week.

 The FT Iván Arriagada, chief executive of Chilean copper producer Antofagasta, said there was a “disconnect” between government policies that were not issuing permits for new mines quickly enough, and demand for the metal.  Over the next decade the world would need to add the equivalent of Chile’s entire copper production, he said, otherwise there was a risk the energy transition “will be delayed”.

The expected shortage of the metal, which is used in electricity grids, wiring and electric cars, would mean price swings would be “sharp from time to time”, he said, speaking at the FT Mining Summit last week. “The copper market has traditionally been very sensitive to the short-term contingent macro element,” he added.

Last week copper had its biggest weekly gain in four months, up 6 per cent as it broke through $10,000 per ton, after China announced stimulus measures expected to shore up demand in the world’s largest consumer of the metal.  Copper miners predict industry overhaul as end users rush to secure supply.

Gold record highs have some buyers taking pause but there are expectations are growing for another because of the Chinese stock market explosion.

Zero-Hedge shared Jesse Columbo take saying that ‘He Wrote that “the chart of Shanghai Futures Exchange gold futures, the primary driver behind the gold frenzy in March and April. Since the April peak, prices have been oscillating within a well-defined trading range. However, in a promising turn of events, the contract has recently experienced a technical breakout as Chinese traders returned from the Mid-Autumn Festival, which had closed the country’s financial markets for three days. Although the breakout has been tamed so far, with tepid trading volume, there’s significant potential for it to gain momentum—especially as volume continues to pick up after a lull earlier this month.”

Today’s sell off in gold and silver could get a little bigger but long term try to put on some bullish strategies on this weakness we expect the market to bottom here in a little bit but we are due for so keep that.

It’s very interesting to see what the port strike will do to metals obviously here in the United States metals are critical to our auto industry as far as the parts and also the lack of parts this could cause a run to the precious metals and to the industrial metals as a hedge.

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