Prices for base metals rose for the third month in a row in June. Prices for base metals increased 1.6% month-on-month in June, following May’s 0.3% increase. The increase, however, was not seen across-the-board, and ongoing global trade disputes pose downside risks to the outlook for base metal prices.
Fears of labor-related supply disruptions at the Escondida copper mine in Chile, the world's top-producing copper mine, drove copper prices to their highest level in over four years at the start of June. In the following days, however, copper prices slid due to labor negotiations and concerns about growth in China, which is responsible for half the world's consumption of copper. Nickel prices also rose in June due to falling inventories amid speculative moves in anticipation of higher demand for electric vehicles. Steel prices in the United States continued to rise as the implementation of tariffs on steel imports is expected to boost domestic prices.
The trade spat among major players put downward pressure on aluminium and alumina prices in recent weeks. Similarly, iron ore prices, a key element for producing stainless steel, fell in June due to the tit-for-tat trade war between the United States and other key economies such as China and the European Union.
Despite concerns about global demand, especially in China, base metal prices are expected to increase 4.4% year-on-year in Q4 2018. Higher steel prices in the U.S., along with strong demand for nickel and tin, will lead the gains. Base metal prices are seen expanding a softer 1.3% year-on-year in Q4 2019.