This story has been updated since it was first published on Feb. 7
Look for recent steep hikes in metals prices to go into reverse by spring, as investors’ expectations run up against economic realities: A pokey U.S. economic recovery and waning demand from China, which had been stockpiling bargain priced supplies.
Manufacturing and other industrial use of metals will remain tepid. Meanwhile, even China’s voracious purchases of metals that boosted prices by 50% or more since fall won’t be enough to sustain further price run-ups, given the abundant supplies of metals. Nickel supplies, for example, are at about a 20-year high. China’s new, tighter bank lending policies and a strengthening dollar will further restrain metals usage and prices.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Moreover, the recent commodity rally sparked by fears of possible debt repayment defaults by Greece and Portugal will run out of gas soon; it’s just a hiccup in the overall trend of sliding metals prices.
Prices for nickel will slip 20% by fall, while aluminum and copper prices will tumble 25%. The decline for zinc prices should be around 15%. That’ll put prices back in the neighborhood they were in last fall for a few months, before they head up again around November in anticipation of a stronger 2011 economy.
Still, the average price this year will run much higher than last year, up about 10% for nickel, 20% for aluminum, 25% for copper and around 45% for zinc, mainly because prices early in 2009 crashed in the wake of a recession-induced selloff.
For steel, the opposite scenario: Prices will move modestly higher through June, due to a surge in prices that took hold last fall for scrap metal and iron ore. This was largely China’s doing, too. Its industries went on a buying binge for low-priced scrap that’s made into new steel in electric furnaces.
“There is great suspicion that China acquired vast amounts of iron ore so come March when (world) prices are negotiated, China can drop out of the market entirely and use its leverage” to secure lower prices, says John Anton, a steel analyst with IHS Global Insight.
For weekly updates on topics to improve your business decisionmaking, click here.
-
The Most Popular Apps for Retirement Planning in 2025A J.D. Power survey ranks retirement planning apps based on customer service and satisfaction. Does your financial app make the cut?
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
How AI Puts Company Data at RiskThe Kiplinger Letter Cybersecurity professionals are racing to ward off AI threats while also using AI tools to shore up defenses.
-
AI Start-ups Are Rolling in CashThe Kiplinger Letter Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.
-
What is AI Worth to the Economy?The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
Kiplinger Special Report: Business Costs for 2026Economic Forecasts Fresh forecasts for 2026, to help you plan ahead and prepare a budget on a range of business costs, from Kiplinger's Letters team.
-
Trump-Era Regulations Will Broaden Access to CryptoThe Kiplinger Letter The president wants to make the U.S. the leader in digital assets.
-
How to Adopt AI and Keep Employees Happy
The Kiplinger Letter As business adoption of AI picks up, employee morale could take a hit. But there are ways to avoid an AI backlash.
-
The Rise of AI: A Kiplinger Special ReportThe Kiplinger Letter Our special report looks at the opportunities and challenges of generative AI and how its rapid move into the mainstream is impacting every aspect of our lives.
