Base metals shine in 2021 on robust China demand, supply concerns

Ryan M. Cason

Base metals shine in 2021 on robust China demand, supply concerns

Base metals, which were mixed in late Asian trading on Friday, were poised to end 2021 firmer across the board, propped up by an economic rebound in top consumer China and supply concerns.

Prices on the London Metal Exchange were mostly lower on the last trading day of the year, with copper virtually flat at $9,695 a tonne by 0708 GMT, after MMG Las Bambas mine in Peru said it would resume operations that had been halted due to a road blockade.

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Copper on the Shanghai Futures Exchange ended daytime trading 0.5% higher at 70,380 yuan ($11,043.46) a tonne.

Both London and Shanghai copper benchmarks have gained more than 20% this year so far.

While support for metal prices is expected to remain intact in 2022 as the world economy continues to recover from the pandemic shock, some analysts expressed guarded optimism.

Base metals' 2021 gains

“China has been a primary source of demand for base metals since 2003, but we think this trend has started to come to an end,” said Justin Smirk, senior economist at Westpac in Australia.

“With the decline of investment and production as key growth drivers, this will see diminishing incremental economic growth and a reduction in materials demand as a share of output,” he said.

China’s factory activity unexpectedly accelerated in December, but only by a small margin, according to an official survey released on Friday, amid disruptions from covid-19 outbreaks and as the broader economy loses momentum in the fourth quarter.

The LME and Shanghai exchange will be closed on Monday for the New Year break.

(Reporting by Enrico Dela Cruz in Manila; Editing by Vinay Dwivedi)


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